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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 20, 2010

The US stock market is well...... not the US stock market

DJIA 11107 +129.25 S&P 500 1178.17 +12.27 NASDAQ 2457.39 +20.44
DJT 4749.38 +102.10 DJU 411.23 +3.44 IBD100 265.03 +2.78 VIX 19.74 -.84
US Gov rates: 6 mo .167%  2 yr .3507% 10 yr 2.48  30 yr 3.89 -.02
Gold 1344.20 +8.20 Silver 23.86 +.08 Oil 82.54 +2.05 USD 77.37 -.75
Days to option expiration 23 Day 3 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 10/8 ECRI Index  -6.9 % annualized
Consumer confidence 48.5 (Above 50 is good)
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
 IMF, Goldman Gloomy on economy expects sluggish or renewed recession over next 6-9 months
 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%
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
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
Commercial property prices fell 3.3% in August, lowest level in 8 years
Brazil raises taxes on bonds and asks for a stop to the currency wars.
G-20 will meet the end of this week. Guess what they will be talking about that's right the $ weakness.
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%
US wants G-20 finance ministers to address trade imbalances and wants developing countries to let their currencies rise in line with market forces
Yield on Chinese 5 year bomds jumped to 2.97% highest yield since 2009

Short Term Trading Indicators

Mikey OB/OS index(80 OB 20 OS) 81
Put/Call Ratio(.6 OB 1.2 OS)  .74 10 day average .79
Ratio Put Premiums/Call Premium .77(OB .53/ OS 1.54) Put Premium 10 day average .66
Williams %R 12 day -13.09 ( uptrend OB:-1.00, downtrend OS -99): Weekly -4.35
% Advisory Service Bulls 47.2  Bears 27.4 Bear/Bull ratio .58   Bullish
Mikey Thrust indicator: Daily 9 Weekly 10 (1 low, 10 max) Max thrust 9/3
DJIA MACD +1.4892 Falling/ Negative cross 10/19
NYSE New Highs 190 New Lows 5
NASDAQ New Highs 92  New Lows 21
NYSE Advance-Decline +1567 NASDAQ Advance-Decline +1097
Mikey A/D line.(from 9/17/10). NYSE +7293 NASDAQ +4747
Support: 1130 S&P, 10720 DJIA Breakout 9/20
Resistance: 1220 S&P; 11200 DJIA
IBD 100 index Breakout  9/2 242.87

Moving Averages
DJIA 5 day 11077 Falling/Price above
DJIA 20 day 10938 Rising/Price above
DJIA 50 day 10591 Rising/Price above
DJIA 200 day 10509 Rising/Price above

Mikey Power Index (MPI) (Uptrend Above 60, Sell below 50, Downtrend below 40) (Uptrend = +, Downtrend = -, Neutral = 0)

Stocks 44 0, Bonds 27- Emerging Mkts 51 0, China 76+, Brazil 52 0, Oil 63+, Nat Gas 29 -, Copper54 0, Gold 53 0, Silver 61+, USD 42 0, Aussie 59 0, Euro 71+, Brit Pd 56 0

Trends
Mikey Short term trend: Up as of 9/2 @ 10320....32days
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

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 Short ETF Score 741  ( 2 up, 9 down, 7 neutral)

DXD 49 0, SDS 27-, DZZ 48 0, ZSL 39 0, DUG 29 - , EEV 46 0, FXP 17 -, SMN 55 0, CMD 61 +, SKF 35 0, SRS 26 -, SZK 27-, QID 46 0 SCO 37- , RXD 50 0, TBT 70 +, SDP 31- REW 48 0

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

2x Long ETF SCORE 1106   (11 up, 2 down, 5 neutral)

DDM 34-, SSO 71+, UGL 56 0, AGQ 61+,DIG 73+, EET 72+,XPP 72+, UYM 47 0 UCD 60 0, UYG 67+, URE 74 +, UGE 55 0, QLD 57 0, UCO 66+, RXL 79 +, UBT 26 - , UPW 78 0, ROM 58 0

ETF Total Score +365 (Positive total indicates uptrend)



Yesterday China raised its interest rates and the US stock market sold off 160 points and the dollar rallied. That will give you a good idea who is running this place. The US economy means nothing to the US market its the Chinese that are calling the shots. 

The strength of the Chinese economy determines the economic health of the "US" corporations. The politicians are of course bought by the US corporations and corporations are  getting their earnings for China
so it is not hard to figure out who is running the country

The Chinese though are dependant on its consumers in the US. The US consumer is slowly going down the river of no return. Rates keep falling in the US because of a poor economy and a lack of demand by business in the US, but they are rising in China because of strong growth and inflation.

The banks keep trading the US market and making profits but write off foreclosed properties in the US.  The corporations are working their way out of this mess but the economy is not. The banks keep on extending and pretending. That is to say that the derivative mess is just something they don't talk about. The US consumer is being ignored as the corporations work their magic overseas. They want to talk about the earnings that they are making in China. They represent themselves as US corporations but they are not. Their allegiance is to money and not the US.

Bank America is being sued because it has 47 billion in mortgages that have no property as collateral. How many others have the same problem. It is a secret that is not so secret. It again is something that we don't talk about. It will again create the same problem we had in 2007 and 2008. That problem with B of A is not a big deal now because China is still strong and matters of the US banking system are not the focus.

The day will come where the Chinese economy will roll over and they will not have the US consumer to bail them out. The will be the day that the US banking problems will come to light and the stock market will come unglued. The action of yesterdays market was a small glimpse of that when the Chinese raised their interest rate to slow their economy and the US dollar rallied.  Think about it.

Mikey
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