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Posts will be between 8:30 PM to 10:00 PM PST
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

Friday, January 28, 2011

Egypt causes sell off? I don't see it that way.

DJIA 11823.70 -166.13 SPX 1276.34 -23.20 NASDAQ 2686.89 -68.39
DJT 4994.87 -140.44 DJU  408.94 -23.20 VIX 20.04
US Gov rates: 6 mo .137%  2 yr .5424% 10 yr 3.32 -.07 30 yr  4.53 -.05
Gold 1318.40 +22.30 Silver 27.92 +.90  Copper 4.37 +.03 Platinum 1805 +1.50
Oil 89.49 +3.85 RBOB 2.45 +.04 Nat Gas 4.32 uch 
Aussie .9960 +.35 EURO 1.3557 -0129 Pound 1.5768 -.0067
USD Index 78.28 +.42 DBC 28.09 +.35
Days to option expiration: 20

Long Term Opinions:

US Bonds: Major long term top forming. .... Current trend down
Muni Markets: Rough times ahead: 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 down 1-24
Commodities: Bear market rally ending..... Current trend up weakening
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 down
Emerging Markets Debt: A disaster.... Current trend down
World economy: Current trend slowing
World political environment: Tension, aggravated
Where's Waldo: Waldo is buying Gold, Foreign Bonds and Emerging Markets.

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
Mikey current trend opinion: 1-21 (DJI 11871) The caution light is on for this uptrend :
IBD : 1-28 11823 uptrend under pressure


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

Short Term Trading Indicators


Mikey OB/OS index (80 OB 20 OS) .80
Put/Call Ratio(.6 OB 1.2 OS)1.00
10 day average .79
Ratio Put Premiums/Call Premium  (extremes .60/ 1.54) .
Put Premium 10 day average
Sentiment Total Score: Put/call + premium ratio = 
10 day Sentiment Total Score: Put/call + premium ratio =
Daily-Weekly=
Williams %R 12 day -.56.27weekly -.17.89
Bulls 56 Bears 20.9 Bull/Bear ratio 2.67
Mikey Thrust indicator: Daily 4 Weekly 8 (1 low, 10 max) 12, -4
DJIA MACD 126.04 falling /Positive cross 1-18
NYSE New Highs 142 (Lagging)New Lows 19
NASDAQ New Highs 100 (Lagging) New Lows 26
NYSE Advance-Decline -2049 NASDAQ Advance-Decline -1802
Mikey A/D line.(from 9/17/10). NYSE 16129  NASDAQ +5964
NYSE % above 200 day ave  %

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

Comments:
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
1-19 Big distribution day NYSE 1646 net declines Nasdaq 1758 net declines
1-20 Google blows away earnings estimate
1-20 IBD goes to market under pressure
1-20 AAPL selling off on big volume
1-21 Mikey Caution light is on for this uptrend
1-21 Google stocks reverse lower on big volume
Options expire
1-25 Consumer confidence strong, State of the Union message..overhall taxes
1-26 IBD Uptrend resumes, S&P, NASDAQ 2 year highs..Fed meets no changes Assets rally
1-28 Big distribution day second in 2 weeks
1-28 IBD uptrend under pressure

Moving Averages

5 day 11951  Falling/Price below
20 day 11786 Rising/ Price above 
50 day 11526 Rising/Price above
200 day 10820 Rising/Price above
20 week 11307 Rising/Price above
50 week 10799 Rising/Price above
90 week 10255 Rising/Price above
200 week 10905 Flat/Price above

World Markets (Power Numbers) Ave score 50
DJIA 68 Emer Mkts 27 China 35, Brazil 33 Europe 51  Russia 53  Japan 51  Korea 45, India 35, Australia 49  Germany 72, Spain 82  UK 57

Commodities (Power Numbers)
Oil 43, Nat Gas 46, Gasoline 53
Gold 44, Copper 55,  Silver 37, Platinum 57
Grains 49 DBC 67


Currencies (Power Numbers)
USD 25, Aussie 47 Euro 78 , Brit Pd 66, Yuan 44, Yen 69

US Industry Groups (relative strength) Ave Score 48
3 up, 24 Neutral, Downtrend 6 Score -3

Homebuilders (XHB) 51,  Real Estate (IYR) 59, Finance (XLF) 51, Insurance (IAK) 50 , Broker/Dealers ( IAI) 51, Retail (XRT) 41, Consumer Disc (XLY) 41, Telecom (IYZ) 46, Consumer Staple (XLP) 39, Health (XLV) 41, Pharma (IHE) 36, Biotech (PBE ) 38, Transports (IYT) 40 Aerospace (ITA) 58, Shipping (SEA) 34, Airlines ($XAL) 39, ,Utilities (XLU) 50 , Metals and Mining( XME) 50, Copper (COPX) 44, Nat Gas Production (FCG ) 58, Oil Expl and Prod (IEO) 55 Oil Service (OIH) 68,  Coal (KOL) 42,  Energy (XLE) 65, Gold Miners (GDX) 39, Steel  (SLX) 46, Basic Mat (XLB) 47, AgriBusiness (MOO) 56, Tech (XLK) 52, Semiconductors (SMH) 61, Software (SWH) 54 Networking (PXQ) 56, Internet (FDN) 44



Bonds (Relative Strength)
 (0 up, 1 down, 5 neutral) Score -1

MUB (Natl Muni) 55 NCA(Ca Muni) 44 
BND (Total Bond Index) 52 BWX (International Treas Bonds) 57, PCY (Emerg Mkt Debt) 31 TLT (20+ US Treasuries) 47, IEF ( 10 yr Treasuries) 51, PFF (US preferred) 51, HYG (High Yield) 57

They will blame the sell off on Egypt but it is about what is going to happen to the economy. There is always an unexpected event that tips the scales. The sell offs from these kinds of tops can leave you trapped. That is what I see happening here. There were alot of reversals and divergences before this sell off today. I documented this condition over the past 2 weeks in my blog.

The rally in Gold came just as the uptrend was being questioned. The Egypt thing comes at just the right time to keep you long Gold. This Gold rally is not a real one it is just a snap back to run the shorts and keep the longs clinging on to their Gold. The oil market also broke on this last sell off and its rally today is the same thing that is going on in Gold.

My industry groups list flipped to minus 3 and there are only 3 groups up now. That is almost enough for me to call a top but I will wait for more confirmation. Emerging markets also broke down today. Brazil is now at the 200 day and has caught up with China. The world economy is creaking and the financial markets are starting to show it. I will add to my Gold short on Gold strength next week. I bought the EDZ this AM at 21.50. I will start to my SCO position next week as Oil snaps back

Mikey
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