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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 29, 2010

Holding at the 50 day

DJIA 11052.49 -39.51 SPX 1187.76 -1.64 NASDAQ 2525.22 -9.34
DJT 4896.24 +16.99 DJU 391.35 -1.29 IBD 100 286.00 -.89 VIX 21.53
US Gov rates: 6 mo .198%  2 yr .5039% 10 yr 2.81 -.06  yr 4.13 -.08
Gold 1366 +3.00  Silver 27.15 +.48 Copper 3.76 +.02 
Oil 85.73 +1.87  RBOB 2.22 +.06  Nat Gas 4.20 -.21 DBC 25.31 +.05
USD Index 80.90+.47  Aussie .9665 -.0006 EURO 1.307 -.00128
Pound 1.5491-.34 Yen 83.13 -.96
Days to option expiration 15 Day 5 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 down
Gold: Primary top forming crash expected.....  Current trend correcting
Oil : Secondary bear market rally ending..... Current trend down
Commodities: Bear market rally ending..... Current trend neutral
Real Estate: Bottoming no uptrend..... Current trend down
US Dollar: Major long term bottom forming .....Current trend up
US Economy: Double dip coming .....Current trend neutral
Emerging Markets: Bear market rally ending..... Current trend down
World economy: Current trend slowing
World political environment: Tension, aggravated

Economy:
11-24 Durable goods fell 3.3%
Jobless claims fell 34000 last week to 407000
Personal spending +.4% in Oct
U of Mich Consumer sentiment 71.6% highest since June
ECRI Nov 19th -3.1%
New home sales fell 8.1%, ave price of a home fell 13.9% in August

Noteable:
Texas jury convicted ex- republican house leader Tom Delay of illegally funneling 190000 of corp donations to Texas GOP candidates in 2002. He was once the most powerful Republican in Congress.
North Korea attacks South Korea
US carrier ordered to Korea for war games with S Korea on Sunday.
Deere beats but outlook weak

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) .74
Put/Call Ratio(.6 OB 1.2 OS) .87
10 day average .75
Ratio Put Premiums/Call Premium . (OB .53/ OS 1.54) .72
Put Premium 10 day average .71
Sentiment Total Score: Put/call + premium ratio = 1.59
Williams %R 12 day -68.7.( uptrend OB:-1.00, downtrend OS -99): Weekly -40.5
% Advisory Service Bulls 55.7 Bears 21.6  Bull/Bear ratio 2.57 Advisors bullish
Mikey Thrust indicator: Daily 3 Weekly 6 (1 low, 10 max) -3
DJIA MACD 13.21 Falling/ Negative  cross 11-12 (second cross)
NYSE New Highs 69 New Lows 26
NASDAQ New Highs 83 New Lows 49
NYSE Advance-Decline -463 NASDAQ Advance-Decline -264
Mikey A/D line.(from 9/17/10). NYSE +8527  NASDAQ +2980
NYSE % above 200 day ave:  68%

Support: 1130 SPX, 10720 DJIA Breakout 9/20
Resistance: 1220 SPX; 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 inter day down 4.6% in last 4 sessions ..That was quick
11-17 Bounce off of sell signal
11-23 Dollar in uptrend
11-24 Sharp pre-Thanksgiving rally on low volume
Conclusions: Still correcting an intermediate term uptrend.

Moving Averages

DJIA 5 day 11109 Falling/Price below
DJIA 20 day 11207 Falling/Price below
DJIA 50 day 11063  Rising/Price above
DJIA 200 day 10626 Rising/Price above

Mikey Power Index (MPI)
(Uptrend = +, Downtrend = -, Neutral = 0)

World Markets, Commodities, Currencies

DJIA 26, Emer Mkts 28 China 28, Brazil 24, Europe 21, Russia 27 Japan 43, Korea 38, India 39, Australia 24, Germany 27, Spain 30, UK 32
Oil 34, Nat Gas 56, Gasoline 48
Gold 32, Copper 34,  Silver 57, Platinum 51, DBC 41,
USD 78, Aussie 23, Euro 28, Brit Pd 17, Yuan 41, Yen 33

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

Homebuilders(XHB) 46, Basic Mat (XLB) 51, Energy (XLE) 58 Finance (XLF) 46, Tech (XLK) 50, Retail (XRT) 69, Health (XLV) 42, Airlines ($XAL) 58, Utilities (XLU) 36 ,Gold Miners (GDX) 51,
Real Estate (IYR) 48. Consumer Disc(XLY) 57, Consumer Staple(XLP) 46, Metals and Mining(XME) 58 

Bonds

MUB (Natl Muni) 36,  NCA(Ca Muni) 30
BND (Total Bond Index) 47, BWX (International Treas Bonds) 21,
TLT (20+ US Treasuries) 49, IEF ( 10 yr Treasuries) 31,
PFF (US preferred) 43, HYG (High Yield) 43
2X ETF Short (12 up, 6 Neutral, 0 down) Score 1203
Green=up, Red= down, Black = neutral

DXD 75, SDS 81, DZZ 72, ZSL 48, DUG 45  EEV 78, FXP 72, SMN 60, CMD 52, SKF 69, SRS 75 SZK 69, QID 76, SCO 71, RXD 70, TBT 52, SDP 68, REW 70
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=UltraShortltraShortSZK=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 557 (0 up 5 neutral 13  down)
Green=up, Red= down, Black = neutral

DDM 21 SSO 15, UGL 34 AGQ 53, DIG 54, EET 21 XPP 24, UYM 41, UCD 38, UYG 24, URE 16 UGE 21 QLD 21, UCO 34  RXL 21, UBT 52, UPW 40, ROM 27
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 Ultra Nasdaq 100, UCO=Ultra Crude Oil, RXL=Ultra Healthcare, UBT Ultra 20+ Year Treas, UPW=Ultra Utilities, ROM=Ultra Technology


Total Score (uptrend is positive) -646 Correction

The DJIA broke the 50 day mid day but rallied back to close just under it. Power numbers stil very negative and sentiment still bullish.

Mikey
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