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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, December 1, 2010

Not ready to give it up

DJIA 11255.78 +249.76 SPX 1206.07 +25.52 NASDAQ 2549.43 +51.20
DJT 4971.57 115.79 DJU 396.23 4.83  IBD 100 288.93 +5.24 VIX 21.36
US Gov rates: 6 mo .193%  2 yr .5395% 10 yr 2.96 +.15   yr 4.23 +.11
Gold 1388.30 +3.30 Silver 28.42 +.24 Copper 3.94 +.12 
Oil 86.47 +2.16 RBOB 2.29 +.10  Nat Gas 4.27 +.09 DBC 25.81 +.74
USD Index 80.76 -.52 Aussie ..9643 +.0023  EURO 1.3074 +.0144
Pound 1.5508 +.0036 84.07 -.17
Days to option expiration 13 Day 7 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

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

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) .75
Put/Call Ratio(.6 OB 1.2 OS).72
10 day average .75
Ratio Put Premiums/Call Premium . (OB .53/ OS 1.54) .72
Put Premium 10 day average .72
Sentiment Total Score: Put/call + premium ratio = 1.47
Williams %R 12 day -7.87( uptrend OB:-1.00, downtrend OS -99): Weekly -19.97
% Advisory Service Bulls 55.4 Bears 21.8  Bull/Bear ratio 2.54 Advisors bullish
Mikey Thrust indicator: Daily 9 Weekly 8 (1 low, 10 max) +1
DJIA MACD 11.66 Rising/ Negative  cross 11-12 (second cross)
NYSE New Highs 261 New Lows 13
NASDAQ New Highs 232 New Lows 38
NYSE Advance-Decline +1671 NASDAQ Advance-Decline +1175
Mikey A/D line.(from 9/17/10). NYSE +9444  NASDAQ +3228NYSE % above 200 day ave:  66%

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
Conclusions: Challenging intermediate term uptrend.

Moving Averages

DJIA 5 day 11118 Rising/Price above
DJIA 20 day 11205 Rising Price above
DJIA 50 day 11078  Rising/Price above
DJIA 200 day 10634 Rising/Price above

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

World Markets, Commodities, Currencies

DJIA 31, Emer Mkts 27 China 31, Brazil 38, Europe 28, Russia 27 Japan 38, Korea 48, India 54, Australia 32, Germany 26, Spain 44, UK 41
Oil 43, Nat Gas 57, Gasoline 48 Gold 41, Copper 39,  Silver 46, Platinum 44, DBC 32,
USD 42, Aussie 26, Euro 39, Brit Pd 23, Yuan 36, Yen 36

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

Homebuilders(XHB) 59, Basic Mat (XLB) 59, Energy (XLE) 65 Finance (XLF) 50, Tech (XLK) 54, Retail (XRT) 73, Health (XLV) 49, Airlines ($XAL) 59, Utilities (XLU) 45 ,Gold Miners (GDX) 57,
Real Estate (IYR) 50. Consumer Disc(XLY) 64, Consumer Staple(XLP) 54, Metals and Mining(XME) 64 

Bonds

MUB (Natl Muni) 34,  NCA(Ca Muni) 30
BND (Total Bond Index) 51, BWX (International Treas Bonds) 29,
TLT (20+ US Treasuries) 51, IEF ( 10 yr Treasuries) 33,
PFF (US preferred) 35, HYG (High Yield) 46
2X ETF Short (12 up, 6 Neutral, 0 down) Score 1102
Green=up, Red= down, Black = neutral

DXD 67, SDS 75, DZZ 63, ZSL 53, DUG 48  EEV 70, FXP 71, SMN 52, CMD 45, SKF 69, SRS 69 SZK 72, QID 74, SCO 63, RXD 42, TBT 49, SDP 52, REW 68
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 617 (0 up 5 neutral 13  down)
Green=up, Red= down, Black = neutral

DDM 27 SSO 22, UGL 44 AGQ 46, DIG 56, EET 25 XPP 28, UYM 54, UCD 23, UYG 25, URE 23 UGE 20 QLD 26, UCO 41  RXL 30, UBT 57, UPW 44, ROM 26
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) -485 Correction

A sharp rally off of the 50 day average turned the infidels back at the gates. Volume was light and my power numbers still say the market is in a correction.
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