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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

Tuesday, January 18, 2011

Dollar turned back at the gates

DJIA 11837.93 +50.55 SPX  1295.02 +1.78 NASDAQ 2765.85 +10.55
DJT 5221.65 -6.65 DJU 411.78 +.91 VIX 15.87
US Gov rates: 6 mo .183%  2 yr .5926 % 10 yr 3.37 +.05 30yr 4.56 +.04
Gold 1368.20 +6.80 Silver 28.92 +.44  Copper 4.43 uch Platinum 1829.30 +12.30
Oil 91.38 -.29 RBOB 2.48 -.01 Nat Gas 4.42 -.06
Aussie 1.000 +.0087 EURO 1.3333 +.13  Pound 1.5871 +.0088
USD Index 78.96 -.31 DBC27.98 -.04 
Days to option expiration 4 Day 21 of Jan Expiration 1-21

Long Term Opinions:

Bonds: Major long term top forming. .... Current trend down
Stocks: Secondary bear market rally ending......  Current trend up 
Gold: Primary top forming crash expected.....  Current trend down
Oil : Secondary bear market rally ending..... Current trend up
Commodities: Bear market rally ending..... Current trend up
Real Estate: Bottoming ..... Current trend down
US Dollar: Major long term bottom forming .....Current Trend down 1-18
US Economy: Double dip coming .....Current trend up
Emerging Markets: Bear market rally ending..... Current Trend Neutral
World economy: Current trend slowing
World political environment: Tension, aggravated
Where's Waldo: Waldo is buying Gold, Foreign Bonds and Emerging Markets.

Economy:
Earnings season starts will good reports
Noteable:

Stock Market Trends

Mikey Short term up 12-6 11362
Mikey Intermediate Trend: Up 09/03/10 10477
Mikey Long term trend: UP 10/13/10 11052
IBD : 12-21 Market in confirmed uptrend 11478

Oil upside breakout 12-1-10 @87.42 USO 37.29
Gold upside breakout 9-22-10 @1283.50 GLD 123.11
Dollar Index breakdown 9-21-10 @81.17  UUP 23.52
(Prices trading below these breakouts are considered trend reversals)

Short Term Trading Indicators


Mikey OB/OS index (80 OB 20 OS) .96 (market very OB )
Put/Call Ratio(.6 OB 1.2 OS).62
10 day average .65
Ratio Put Premiums/Call Premium  (extremes .60/ 1.54) .50
Put Premium 10 day average .54
Sentiment Total Score: Put/call + premium ratio = 1.12
10 day Sentiment Total Score: Put/call + premium ratio =1.19
Daily-Weekly=-.
Williams %R 12 day -6.34, weekly 2.33
Bulls 57.3 Bears 19.1 Bull/Bear ratio 3.00
Mikey Thrust indicator: Daily 9 Weekly 10 (1 low, 10 max) 19, -1
DJIA MACD 102.79 UP /Positive cross 1-18
NYSE New Highs 305 New Lows 46
NASDAQ New Highs 266 New Lows 10
NYSE Advance-Decline +252 NASDAQ Advance-Decline -91
Mikey A/D line.(from 9/17/10). NYSE +17392 (NH) NASDAQ +9109
NYSE % above 200 day ave:  79 %

Support: 1220 SPX, 11258 DJIA Breakout 9/20
Resistance: 1305 SPX; 11867 DJIA
Downside reversal 1207 SPX, DJIA 11200, NASDAQ 2550

Comments:
12-3 MACD Positive cross
IBD market in confirmed uptrend
12-6 Power numbers turn positive
Mikey short term up
12-7 Extermely low sentiment numbers...very overbought
Possible Metals reversal
Conclusions: Upside Price trend resumes 
12-14 AD line and NH/NL do not confirm DJI new high
New lows hit a 1 month high
30 year bonds return to April lows (amid Fed buying??????)
12-15 IBD Market under pressure
12-17 Gold MACD second negative cross RSI 46
New highs, AD line non confirm new high in DJIA
Options expire
12-20 Nasdaq rallies to new high for 3rd straight day.
12-21 IBD  market in confirmed uptrend
12-27 New highs in A/D lines for both N/H N/L lagging
12-31 Negative MACD cross
1-3 New highs on averages and A/D line N/H N/L Still off Nov 4 highs
1-4 Gold drops $44 Oil 2.17 Commodities showing weakness
Market sells off on higher volume DJIA up
Dollar holds 50 day average turns up
1-7 Foreign markets showing weakness. India in a downtrend
Dollar nears intermediate reversal levels up
Bad news in Europe surfaces again
1-10 MACD Negative cross
World markets give sell signal
1-12 New highs in DJI and NASDAQ confirmd by AD Line.
1-13 New lows expand on NYSE to 111
1-14 New highs confirmed by AD line
1-18 AAPL blows away earnings

Moving Averages

5 day 11756 Rising/Price above
20 day 11644 Rising/ Price above 
50 day 11426 Rising/Price above
200 day 10784 Rising/Price above
20 week 11237 Rising/Price above
50 week 10764 Rising/Price above
90 week 10218 Rising/Price above
200 week 10906 Flat/Price above

World Markets (Power Numbers) Ave score 55
DJIA 61 Emer Mkts 47 China 53, Brazil 49 Europe 72  Russia 70  Japan 59, Korea 63, India 45, Australia 45  Germany 51, Spain 63  UK 40Commodities (Power Numbers)
Oil 46, Nat Gas 54, Gasoline 50,
Gold 43, Copper 44,  Silver 34, Platinum 60
Grains 59 DBC 64


Currencies (Power Numbers)
USD 36, Aussie 35, Euro 51 , Brit Pd 79, Yuan 63, Yen 61

US Industry Groups (relative strength) Ave Score 66
25 up, 7 Neutral, Downtrend 1 Score +21

Homebuilders (XHB) 66,  Real Estate (IYR) 65, Finance (XLF) 68, Insurance (IAK) 62 , Broker/Dealers ( IAI) 73, Retail (XRT) 43, Consumer Disc (XLY) 64, Telecom (IYZ) 46, Consumer Staple (XLP) 58, Health (XLV) 67, Pharma (IHE) 62, Biotech (PBE ) 65, Transports (IYT) 64 Aerospace (ITA) 81, Shipping (SEA) 58, Airlines ($XAL) 48, ,Utilities (XLU) 62 , Metals and Mining( XME) 59, Copper (COPX) 67, Nat Gas Production (FCG ) 79,Oil Expl and Prod (IEO) 79, Oil Service (OIH) 69,  Coal (KOL) 61,  Energy (XLE) 75, Gold Miners (GDX) 37, Steel  (SLX) 62, Basic Mat (XLB) 68, AgriBusiness (MOO) 81, Tech (XLK) 77, Semiconductors (SMH) 82, Software (SWH) 73, Networking (PXQ) 74, Internet (FDN) 71


Bonds (Relative Strength)
 (1 up, 2 down, 6 neutral) Score -1

MUB (Natl Muni) 37 NCA(Ca Muni) 33 
BND (Total Bond Index) 47 BWX (International Treas Bonds) 54, PCY (Emerg Mkt Debt) 40 TLT (20+ US Treasuries) 41, IEF ( 10 yr Treasuries) 52, PFF (US preferred) 58, HYG (High Yield) 67

The dollar uptrend was hammered by the need  to bailout the bond buyers in Spain and Portugal.. Those buyers were rewarded by a nice spike in the Euro. You know the offering went better than expected. Well if you knew the Euro was going up you would have bought the bonds too.


Spain


Euro


Dollar Index
The Spanish market took off like a gambler that just scored fresh money. Which is exactly what happened. Oh well another day in the wonderful world of finance.

Mikey
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