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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

Wednesday, October 27, 2010

Rates continue to rise in front of QE 2

DJIA 11126.28 -43.18 S&P 500 1182.45 -3.19 NASDAQ 2503.26 +5.97
DJT 4737.19 -42.53 DJU 402.77 -1.49 IBD100 273.84 -.22 VIX 20.77 +.55
US Gov rates: 6 mo .175%  2 yr ..414% 10 yr 2.72 +.07 30 yr 4.05 +.06
Gold 1322.60 -16.00 Silver 23.41 -.43 Oil 81.94 -.61 USD 77.97 +.23
Days to option expiration 18 Day 8 of November Expiration 11/19

Long Term Opinions:

Bonds: Major long term top forming. .... Current trend down
Stocks: Secondary bear market rally ending......  Current trend up weakening
Gold: Primary top forming crash expected.....  Current trend up
Oil : Secondary bear market rally ending..... Current trend up
Commodities: Bear market rally ending..... Current trend up
Real Estate: Bottoming no uptrend..... Current trend neutral
US Dollar: Major long term bottom forming .....Current trend down
Emerging Markets: Bear market rally ending..... Current trend up
Economy: Double dip coming .....Current trend down

Economic Conditions: Poor

Week ended 10/15 ECRI Index  -6.8% annualized
CEO economic index Sept 86 , June 94.6
ISM Index Aug  56.3 (above 50 is growth) new low for 2010
New orders index 51.1 Lowest since June 09
Backlog index 46.5 lowest since April 09
Inventories 55.6 Highest since July 1984 a 26 year high.
Auto and light trucks Aug 11.7 (16 million was average for past 15 years)
Jobless initial claims fell to 453,000
Chicago PMI 60.4
Sept Employment index 53.4
10/6 ADP employment report -39,000  jobs by private employers in Sept
  Foreclosures rose to 282,528 in August
10/7 Nonfarm payrolls declined 95000 in Sept
Jobless rate 9.6% , underemployed rate 17.1%
Sept Manufacturing jobs -6000
Long Term unemployment (% out of work  26 weeks) 41.7%
10/14 Mortgage Applications  rise 14.6% last week Purchase apps fell 8.5%
Core PPI +.1%
Trade Balance -46.3 Bil
10/15 U of Mich Consumer sentiment 67.9
Core PPI .8% (49 year low)
Sept Retail Sales 0.6% Ex Autos +0.4% 
Aug Business inventories +0.6%
10-18 Sept industrial production fell .2%, Homebuilder confidence 16 (50 is average)
10-19 China raises rates to curb inflation: French riot over increase in retirement age
Intel will invest 6 billion in US chip plant
Housing starts rose .3% annual rate 610000, Building permits fell to annual rate of 579000
.10-20 Mortgage apps fell 10.5% last week Purchase demand fell 6.7% near a 13 year low  Refi's were down 11.2% 6th decline in 7 weeks
30 year mtg rates  averaged 4.34%
Yield on Chinese 5 year bonds jumped to 2.97% highest yield since 2009
10-21 China GDP slows to 9.6% Industrial Production 13.3% Consumer Prices +3.6% Retail Sales 18.8%
10-25 Sept existing home sales rose 10% annual rate 4.53 mil an annual decline of 19.1%
 Inventory of unsold homes 4.04 mil, Mortgage apps index 803.4
Chicago Fed activity index fell .9 in Sept to -.58 (reading below zero indicate negative growth)
Credit card write offs rose to 10.3% from 9.45% in July
10-26 Consumer confidence 50.2, Jobs hard to get index 45.8, Jobs plentiful index fell to 3.5 from 3.8
Economist expect GDP 3Q release on Friday to be 2% rate
10-27 Durable goods +3.3%, ex-aircraft -.07%,Inventory to shipment ratio 1.59, Sept Order backlog 1%
Sept new home sales +6.6% 307,000 annual rate, near May record low of 282,000

Noteworthy
10-5 IMF, Goldman Gloomy on economy expects sluggish or renewed recession over next 6-9 months
10-15 Atlanta Fed chief Dennis Lockhart: "US Economic growth has slowed pretty dramatically and deflation is a concern."
South Korea: Warns of trade war wants compromise on exchange rates
Japans PM Naoto Kan: Yen's rise is extremely excessive
Beige book survey of economic conditions noted retail sales flat to mod positive in 10 of 12 districts with 2 districts saw declining traffic
10-19 Brazil raises taxes on bonds and asks for a stop to the currency wars.
Goods producers are facing higher prices for shipping and are having trouble passing those increases on to customers squeezing profits
Fiscal policy is tightening at all levels of government . State and local governments have cut 54,000 jobs in each of the last 3 months.
Labor dept estimate that 3 million unemployed workers will have exhausted their 99 weeks of jobless benefits by year end.
G-20 will meet the end of this week. Will focus on $ weakness
Commercial property prices fell 3.3% in August, lowest level in 8 years
10-20 US wants G-20 finance ministers to address trade imbalances and wants developing countries to let their currencies rise in line with market forces
10-25 French strikes on 62 retirement age costing economy
10-26 Iran begins fueling Nuke reactor, Steel stocks fall on weak demand, DuPont outlook disappoints
Data to be released Inflation adjust disposable income to be a weak .8%
Bin Laden warns France of vail ban "we will compromise your security"
China warns of inflationary risks

Short Term Trading Indicators

Mikey OB/OS index(80 OB 20 OS) 77
Put/Call Ratio(.6 OB 1.2 OS) .86 .10 day average .81
Ratio Put Premiums/Call Premium .64 (OB .53/ OS 1.54) Put Premium 10 day average .66
Williams %R 12 day -36.4( uptrend OB:-1.00, downtrend OS -99): Weekly -9.27
% Advisory Service Bulls 45.6  Bears 24.4  Bear/Bull ratio .535   Bullish
Mikey Thrust indicator: Daily 6 Weekly 9 (1 low, 10 max) Max thrust 9/3
DJIA MACD +137.60 Falling/ Negative cross 10/19
NYSE New Highs 80 New Lows 16
NASDAQ New Highs 91 New Lows 26
NYSE Advance-Decline -898 NASDAQ Advance-Decline -632
Mikey A/D line.(from 9/17/10). NYSE +7291 NASDAQ +4763
Support: 1130 S&P, 10720 DJIA Breakout 9/20
Resistance: 1220 S&P; 11200 DJIA
IBD 100 index Breakout  9/2 242.87
Mikey power index on DJIA peaked on 9/22 at 88
MACD  First negative cross 10/19
Interest rates turning higher (is Fed Printing or selling?) Rates at 1 month highs
Dollar stabilizing
Put Premiums remain low indicating low demand for puts

Moving Averages
DJIA 5 day 11083 Falling/Price above
DJIA 20 day 11024 Rising/Price above
DJIA 50 day 10671 Rising/Price above
DJIA 200 day 10523 Rising/Price above

Mikey Power Index (MPI)
 (Uptrend Above 60, Sell below 40)
 (Uptrend = +, Downtrend = -, Neutral = 0)

Stocks 46 0, Bonds 23- Emerging Mkts 45 0, China 58 0, Brazil 33 -, Oil 42 0, Nat Gas 27-, Copper 50 0, Gold 41 0, Silver 51 0, USD 56 0  Aussie 51 0, Euro 63 +, Brit Pd 50 0

Trends
Mikey Short term trend: Up as of 9/2 @ 10320....40 trading days.. 8 weeks
Mikey Intermediate Trend: Up 09/03/10 10477
Mikey Long term trend: UP 10/13/10 11052
IBD : Confirmed Uptrend as of 9/01 @ 10269

2x Short ETF Score 841 ( 4 up, 6 down, 8 neutral)
Green=up, Red= down, Black = neutral

DXD 52, SDS 35, DZZ 60, ZSL 50, DUG 37, EEV 57, FXP 43, SMN 60, CMD 41, SKF 41, SRS 39, SZK 20, QID 22, SCO 54, RXD 48, TBT 76, SDP 74, REW 32

Legend: DXD =UltraShort DJIA,.SDS= Ultra short S&P 500, DZZ= UltraShort Gold, ZSL =UltraShort Silver, DUG =UltraShort Oil index,EEV=UltraShort Emerg Mkts,FXP= Ultrashort China25, SMN=UltraShort Basic Mat, CMD= Ultrashort Commodities, SKF=UltraShort Financials, SRS=UltraShort Real Estate, SZK=UltraShort Consumer Goods, QID =UltraShort NASDAQ 100, SCO=Ultrashort oil, RXD=UltraShort Health Index,TBT=UltraShort 20+ year Treasuries, SDP=UltraShort Utilities REW=UltraShort Technology

2x Long ETF SCORE 1032   (10 up, 1 down, 7 neutral) Green=up, Red= down, Black = neutral

DDM 41, SSO 62 , UGL 42, AGQ 52, DIG 66 , EET 61, XPP 50, UYM 43, UCD 64, UYG 54, URE 63, UGE 74, QLD 78, UCO 43, RXL 81, UBT 22, UPW 64, ROM 72

Legend: DDM =Ultra DJIA, SSO=Ultra S&P 500, UGL=Ultra Gold, AGQ=Ultra Silver, DIG=Ultra Oil index, EET=Ultra Emerging Mkts, XPP =Ultra China25, UYM Ultra Basic Mat, UCD=Ultra Commodities, UYG=Ultra Financials, URE=Ulta Real Estate, UGE=UltraConsumer Goods, QLD UltaNasdaq 100, UCO=Ultra Crude Oil, RXL=Ultra Healthcare, UBT Ultra 20+ Year Treas, UPW=Ultra Utilities, ROM=Ultra Technology


Total Score (uptrend is positive) +191
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