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Mikey's Short Term Trading Rules

1) Make up a list of stocks, commodities or ETF's to trade. This list should be names that have good earnings and high relative strength.
2) Monitor this list and throw out the weaker names
3) Buy only stocks or ETF's that are intermediate and daily up (green) and the market is Daily and intermediate term up (green)
4) Buy pullbacks on these stocks to the 20 and 50 day averages
Usually you get 4 to 6 20 day pullback buys and 2 or 3 50 day pullback buys in an intermediate term trend
5) More agressive traders can buy the 7 day average in the first 3 to 8 weeks of the uptrend.
6) Buy pullbacks not runups. A buy should not be easy or exciting but difficult and somewhat scary. DO NOT CHASE
7) Place stop at 5% below the buy price. Do not remove
8) Sell 3 to 5 days after the stock price takes out its most recent 2 week high with at least 15% gains
9) Uptrends that are 12 weeks or more may be ripe for a correction. The first 2 pullbacks to the 50 day are usually safe.
Intermediate term uptrends and downtrends generally last from 8 to 16 weeks with 12 weeks being the norm.
10) Shorting is a viable strategy in downtrends for experienced traders only. In general, reverse the above rules
11) Tweet Mikey @themarketshadow with questions or ideas

Tuesday, August 17, 2010

They want us to think the Economy doesn't matter

DJIA 10405.85 +103.84 VIX 24.33 -1.77 10 year 2.62 30 year 3.75
Gold 1225.05 +2.75 Oil 75.43 -.08 USD 82.35 -.18
Days to option expiration 3

Economic Conditions: Negative -10.3

Mikey OB/OS index Elevated ---63 (80=OB 20=OS)
Mikey Confidence Index (Traders: Elevated) 65
Ratio Put Premiums/Call Premium Elevated 1.02
% Advisory Service Bulls 41.7 Bears 27.5 Moderately Bullish
US Mutual Funds cash position 3.5% Low cash (high 6.2% Low 3.3%)
Numbers are from the prior day close

Mikey Power Index (MPI)
BUY 60> SELL 50< Short 40<

Stocks 35 Bonds 72 Emerging Mkts 42
Oil 48 Nat Gas 28 Copper 58 Gold 61 Silver 64
USD 28 Aussie 60 Euro 44 Brit Pd 43

Short ETF SCORE 798
DXD 77 DZZ 29 ZSL 34 DUG 48 EDZ 61 SMN 37 SKF 75 SRS 81 SZK 88
QID 79 SCO 48 RXD 59 TBT 30 SDP 65

Long ETF SCORE 643
DDM 25 UGL 63 AGQ 62 DIG 44 EDC 43 UYM 65 UYG 28 URE 22 UGE 58
QLD 24 UCO 50 RXL 54 UBT 80 UPW 21

Total Score -172(Positive number indicates uptrend)

Long Term Opinions:

Bonds: Major long term top forming
Stocks: Secondary Bear market rally ending
Gold: Primary Top Forming
Oil Secondary Bear market Rally ending
Commodities Bear Market Rally ending
Real Estate: Bottoming no uptrend
US Dollar: Forming a Major long term Bottom
Emerging Markets: Bear Market Rally ending
Economy Double dip coming


Cramer (Gamekeeper Pimp) writes 10 Reasons Why We Won’t Crash. I won't bore you with the details

Fast Money trader says: Market Has Legs to Sustain Rally: Trader

Most posts I read say the same thing. Weak economy, yes; double dip, no. Trading range market no crash.

Yes we have been in a trading range, but it is my opinion that the "experts will get the trading public to buy the trading range story and they will be buying the bottom end of the range when we get there. That will give the gamekeeper willing buyers all the way down to 9700.

Below 9700 they will change their story to the Its to late to sell and stocks are cheap. That is how you move stocks lower and have the traders buy from you.

This rally today looks real bogus to me. They need a sell off to get out of their bond positions. They also need to make deflation real. That reality will hit home when the commodities and GOLD take a huge dive.

The story we have now is about the bond market. Stocks are secondary now. The prime directive will be to sell their bonds. I am starting to believe that the bond market is forming a major long term top and that is what this deflation talk is all about. THEY WANT OUT OF THEIR BOND POSITIONS. I think the double dip deflation story will heat up and soon.

Mikey
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