Posting Times

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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

Saturday, December 4, 2010

"Jobless" recovery continues. Market in uptrend The line in the sand (10929)

For Friday 12-3

DJIA 11382.09 SPX 1224.71 +3.18 NASDAQ 2591.46 +12.11
DJT 5068.81 +31.24 DJU 399.03 +1.36 IBD 100 292.62 +1.76 VIX 18.01
US Gov rates: 6 mo .1928%  2 yr .4762% 10 yr 3.00 +.03 30yr 4.31 +.07
Gold 14.16 +26.70 Silver 29.42 .85 Copper 4.01 +.03 Platinum 1731.30 +18.30
Oil 89.44 RBOB 2.35 +.01 Nat Gas 4.32 -.03 DBC 26.62 +.59
USD Index 79.10 -1.23 Aussie ..9939 +.0173 EURO 1.3368 +.0191 Pound 1.5750 +.0236

Days to option expiration 11 Day 9 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
11-30 Chicago PMI 62.5
Consumer confidence 54.1
Case/Schiller home price index fell .8% in Sept Prices +.6% from 1 year ago
12-2 jobless claims rose 26000 to 436000 presented as a positive
November same store sales rose 5.3% vs a year ago presented as a positive for a nice Xmas for retailers
12-3 Non-farm payrolls rose 39000 in November a 10 month low. Jobless rate at 9.8%
Goods producers trimed 15000 jobs Builders cut 5000 workers. Retailers cut 28000, government cut 14000. Service firms added 65000
Underemployment rate was 17%
ISM service sector rose .7% to 55
Analysts stuck to their vew that the economy is recovering at a modest pace.
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
China PMI at a 7 month high
Iran and N. Korea defiant on Nukes
China to be aggressive on monitary controls
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 : 12-3 Market in confirmed uptrend
Short Term Trading Indicators

Mikey OB/OS index (80 OB 20 OS) .88
Put/Call Ratio(.6 OB 1.2 OS). 71
10 day average .74
Ratio Put Premiums/Call Premium . (OB .53/ OS 1.54) .53
Put Premium 10 day average .70
Sentiment Total Score: Put/call + premium ratio = 1.22
Williams %R 12 day -1.87 ( uptrend OB:-1.00, downtrend OS -99): Weekly -7.17
% Advisory Service Bulls 55.4 Bears 21.8  Bull/Bear ratio 2.54 Advisors bullish
Mikey Thrust indicator: Daily 10 Weekly 9 (1 low, 10 max) +1
DJIA MACD 43.22 Rising/ Positive  cross 12-3
NYSE New Highs 279 New Lows 12
NASDAQ New Highs 225 New Lows 25
NYSE Advance-Decline +732 NASDAQ Advance-Decline +564
Mikey A/D line.(from 9/17/10). NYSE +11432  NASDAQ +4517
NYSE % above 200 day ave:  72%

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
11-30 Retesting 11-16 low just below 50 day average. MACD at zero line : Challenging intermediate term uptrend. Dollar at 200 day resistance
12-3 MACD Positive cross
Conclusions: Upside Price trend resumes on weak power numbers

Moving Averages

DJIA 5 day 11190 Rising/Price above
DJIA 20 day 11204 Rising Price above
DJIA 50 day 11102  Rising/Price above
DJIA 200 day 10643 Rising/Price above

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

World Markets, Commodities, Currencies

DJIA 42 Emer Mkts 39 China 35, Brazil 47, Europe 35, Russia 36 Japan 47, Korea 50, India 56, Australia 40, Germany 35, Spain 54, UK 48
Oil 41, Nat Gas70, Gasoline 42 Gold 47, Copper 61,  Silver 55, Platinum 49, DBC 36,
USD 54, Aussie 37, Euro 52, Brit Pd 22, Yuan 38, Yen 54

US Industry Groups (relative strength)
(Uptrend , Downtrend , Neutral ) 8 up, 7 Neutral Score +8

Homebuilders(XHB) 67, Basic Mat (XLB) 65, Energy (XLE) 59 Finance (XLF) 59, Tech (XLK) 59, Retail (XRT) 75, Health (XLV) 53, Airlines ($XAL) 58, Utilities (XLU) 49 ,Gold Miners (GDX) 66,
Real Estate (IYR) 56. Consumer Disc(XLY) 68, Consumer Staple(XLP) 55, Metals and Mining(XME) 70 

Bonds

MUB (Natl Muni) 40,  NCA(Ca Muni) 36
BND (Total Bond Index) 50, BWX (International Treas Bonds) 42,
TLT (20+ US Treasuries) 39, IEF ( 10 yr Treasuries) 36,
PFF (US preferred) 43, HYG (High Yield) 60

2X ETF Short (8 up, 8 Neutral, 2 down) Score 1035
Green=up, Red= down, Black = neutral

DXD 66, SDS 67, DZZ 57, ZSL 43, DUG 55  EEV 66, FXP 73, SMN 50, CMD 40, SKF 70, SRS 57 SZK 70, QID 66, SCO 70, RXD 38, TBT 50, SDP 36, REW 61
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 737 (2 up 4 neutral 12  down)
Green=up, Red= down, Black = neutral

DDM 34 SSO 34, UGL 52 AGQ 54, DIG 53, EET 30 XPP 28, UYM 61, UCD 34, UYG 37, URE 31 UGE 29 QLD 34, UCO 47  RXL 37, UBT 62, UPW 45, ROM 35
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) --298 Correction

The jobless rate rose to 9.8% and the underemployment rate stayed at 17% the government reported Friday. Analyst ( whoever they are) continued to say that a modest recovery is underway. The Fed is a acting quite differently than the "analysts" though as they say they may have QE2 +.

What the Fed is doing is providing liquidity to the corporations who then invest the money overseas. The US real economy at the grass roots level continues to deleverage while the emerging countries are getting overwhelmed with capital. This creates inflation and hot markets which will prove to be unsustainable. The emerging countries bubble will at some point burst just like all hot markets do.

China has raised rates 5 times this year and is planning to be more aggressive in the near future by raising rates and putting more controls on banks to slow down lending. You don't just slow down a heated economy, it does not work that way.

In the mean time, the markets, according to IBD have resumed their uptrend. The volume has contracted on this rally and I think that is a bad sign. Price wise I think we have to give the upside the nod here. All of the indicators are in gear on the upside but my power numbers are weak on this last rally The whole thing from a gut level to me stinks. The average guy out their continues to be squeezed and the banks are not helping him out.

I am drawing a line at 10929, the last low as the reversal of this move. Until then the upside has the call.

Mikey
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