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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

Monday, November 22, 2010

China and Brazil Emerging Markets correcting..Dollar strengthening

DJIA 11178.58 -24.97 S & P 500 1197.84 -1.89 NASDAQ 2532.02 +13.90
DJT 4857.79 -5.65  DJU 398.41 +.41 IBD 100 285.65 +4.77 VIX 18.37
US Gov rates: 6 mo .183%  2 yr .4602 % 10 yr 2.81 -.07  30 yr 4.21 -.04
Gold 1357.80 +4.80 Silver 27.26 +.43  Copper 3.76 -.07
Oil 81.74 -.68 RBOB 2.10 -.01 Nat Gas 4.28 +.11
USD Index 78.62 +.15 Aussie ..9916 +.0032 EURO 1.3571 +..13 Pound 1.5878 -.0030
Days  to option expiration 20 Day 1 of December Expiration 12-17

Long Term Opinions:

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

Stock Market Trends

Mikey Short term trend: ...11-16. market correction 11023
Mikey Intermediate Trend: Up 09/03/10 10477
Mikey Long term trend: UP 10/13/10 11052
IBD : Market under pressure@ 11192 on 11-13 Market in Correction 11-17 11201

Short Term Trading Indicators

Mikey OB/OS index(80 OB 20 OS) .87
Put/Call Ratio(.6 OB 1.2 OS) .76
10 day average .75
Ratio Put Premiums/Call Premium . (OB .53/ OS 1.54) .72
Put Premium 10 day average .62
Score: Put/call + premium ratio = 1.47
Williams %R 12 day -57.97.( uptrend OB:-1.00, downtrend OS -99): Weekly -24.48
% Advisory Service Bulls 56.2 Bears 20.2  Bear/Bull ratio .35   Bullish
Mikey Thrust indicator: Daily 4 Weekly 8 (1 low, 10 max) -4
DJIA MACD 53.0  Falling/ Negative  cross 11-12 (second cross)
NYSE New Highs 16 New Lows 19
NASDAQ New Highs 12 New Lows 48
NYSE Advance-Decline +67 NASDAQ Advance-Decline +33
Mikey A/D line.(from 9/17/10). NYSE +9807  NASDAQ +3722
NYSE % above 200 day ave: 64%

Support: 1130 S & P, 10720 DJIA Breakout 9/20
Resistance: 1220 S & P; 11200 DJIA
IBD 100 index Breakout  9/2 242.87

Comments:
Mikey power index on DJIA peaked on 9/22 at 88
MACD  First negative cross 10/19 MACD peaked on 10/14 @160.92
11-2 .52 Put/call reading
11-4 DJIA breaks out above 11258 April 26 high DJIA at 11200 resistance level
11-5 Indicators overbought all trends up
P/C and premium total a very low 1.09
MCD positive cross  market at new high MACD below 10-14 high possible divergence
Mikey OB/OS @ 87
Put Premiums .48
11-8 Extremely low put activity and premiums
11-11 Market is selling off Put premiums and P/C ratios NOT expanding meaning there is no concern about this sell off.
11-12 Market reverses 11258 breakout of 11-4
11-15 GLD reverses closes below 133.07
11-16 DJIA reverses closes below 11143 hits 50 day average
Muni market hits 52 week low interday down 4.6% in last 4 sessions ..That was quick
11-17 Bounce off of sell signal

Moving Averages

DJIA 5 day 11118 Falling/Price sbove
DJIA 20 day 11215 Flat/Price below
DJIA 50 day 11021  Rising/Price above
DJIA 200 day 10606 Rising/Price above

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

Currencies, Commodities, World markets

DJIA  46, Emer Mkts 43 China 38, Brazil 34, Europe 34
Oil 45, Nat Gas 54, Gasoline 54
Gold 35, Copper 42, , Silver 62, Platinum 46,
USD 46,  Aussie 33  Euro 51  Brit Pd 36
Notes: Nat Gas verge of emerging, China, Brazil Emerging Markets correcting,

US Industry Groups (relative strength)  (Uptrend , Downtrend , Neutral )

Homebuilders(XHB) 44, Basic Mat (XLB) 55, Energy (XLE) 66 Finance (XLF) 45, Tech (XLK) 55, Retail (XRT) 69, Health (XLV) 50, Airlines ($XAL) 63, Utilities (XLU) 45 ,Gold Miners (GDX) 57, Real Estate (IYR) 44. Consumer Disc(XLY) 64, Consumer Staple(XLP) 55, Metals and Mining(XME) 62  

Bonds

MUB (Natl Muni) 34,  NCA(Ca Muni) 47
BND (Total Bond Index) 52, BWX (International Treas Bonds) 45,
TLT (20+ US Treasuries) 34, IEF ( 10 yr Treasuries) 35,
PFF (US preferred) 51, HYG (High Yield) 50

Double ETF's

2X Short ETF Score  1009 (6 up  10 neutral  2 down) Green=up, Red= down, Black = neutral

DXD 58, SDS 60, DZZ 65, ZSL 42, DUG 26, EEV 59, FXP 59, SMN 51, CMD 61, SKF 50, SRS 66 SZK 48, QID 62, SCO 59, RXD 67, TBT 66, SDP 51, REW 59

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=UltraShortSZK=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 734 (2 up 4 neutral 12 down) Green=up, Red= down, Black = neutral

DDM 34 SSO 34, UGL 38 AGQ 60, DIG 76, EET 35 XPP 36, UYM 52, UCD 57, UYG 38, URE 31 UGE 23 QLD 38, UCO 38  RXL 33, UBT 24, UPW 46 ROM 45

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) -375 Correction

The US is hurting and in the middle of this Ben is trying to pump enough money in to keep it going. This is going on while the rest of the world is getting nailed with inflation. The central banks in Asia are raising rates and taxes designed to stop money from flowing into their countries. The real estate situation is similar to the US in 2005. This will not only stop inflation but kill their economies. The action in recent weeks in the emerging markets, I believe, is reflecting this.

My technical numbers now reflect this. These numbers show that the dollar is strengthen and the emerging markets are weakening, The rest of the world is now going through what the US did in 2006. The hot money has been spent and now there is a price to be paid. On a relative basis then what should happen is that the economies in the rest of the world will be falling faster than the US, this causes the dollar to straighten which it is doing now. Every investment strategy in force today is based on a weaker dollar. There will be alot of unwinding to do if the dollar picks up steam.


Mikey
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