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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, January 5, 2011

Market remains in uptrend but extremely overbought

DJIA 11722.89 +31.71 SPX  1276.56 +6.36 NASDAQ 2702 +20.95
DJT 5154.59 +15.59 DJU 406.20 -2.32 VIX 17.02
US Gov rates: 6 mo .173%  2 yr .6966% 10 yr 3.46 +.13 30yr 4.54 +.14
Gold 1373.70 -5.10 Silver 29.20 -.53 Copper 4.40 -.06 Platinum 1734.10 -13.30
Oil 90.30 +.92  RBOB 2.45 +.04 Nat Gas 4.47 -.19
Aussie 1.0001 -.0059 EURO 1.3104 -.0141 Pound 1.5423 -.0075
USD Index 80.54 +.84 DBC 27.59 +.29
Days to option expiration 8 Day 13 of Jan Expiration 1-15

Long Term Opinions:

Bonds: Major long term top forming. .... Current trend down
Stocks: Secondary bear market rally ending......  Current trend up  extended
Gold: Primary top forming crash expected.....  Current trend up stalled
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 up
US Economy: Double dip coming .....Current trend neutral Stalled
Emerging Markets: Bear market rally ending..... Current trend up
World economy: Current trend slowing
World political environment: Tension, aggravated
Where's Waldo: Waldo is buying Gold, Bonds and Emerging Markets.

Economy:

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) .92 (market very OB )
Put/Call Ratio(.6 OB 1.2 OS).33 (YIKES!!!!)
10 day average .64
Ratio Put Premiums/Call Premium  (extremes .60/ 1.54) .59
Put Premium 10 day average .57
Sentiment Total Score: Put/call + premium ratio = .92
10 day Sentiment Total Score: Put/call + premium ratio =1.21
Daily-Weekly= -.29
Williams %R 12 day -6.46, Weekly -2.34
% Advisory Service Bulls 56.8 Bears 20.5  Bull/Bear ratio 2.77
Mikey Thrust indicator: Daily 9 Weekly 10 (1 low, 10 max) 19,-1
DJIA MACD 113.70 Rising/Positive cross 1-3
NYSE New Highs 175 New Lows 9
NASDAQ New Highs 145 New Lows 7
NYSE Advance-Decline +610 NASDAQ Advance-Decline +1102
Mikey A/D line.(from 9/17/10). NYSE +16024 NASDAQ +8431 NH
NYSE % above 200 day ave:  77%

Support: 1220 SPX, 11258 DJIA Breakout 9/20
Resistance: 1305 SPX; 11867 DJIA
Downside reversal 1207 SPX, DJIA 11276, 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
Market sells off on higher volume DJIA up
Dollar holds 50 day average turns up

Moving Averages

5 day 11665 Rising/Price above 
20 day 11529 Rising/ Price above 
50 day 11340 Rising/Price above
200 day 10750 Rising/Price above
20 week 11081 Rising/Price above
50 week 11307 Rising/Price above
90 week 10691 Rising/Price above
200 week 10912 Falling/Price above

World Markets, Commodities, Currencies (Power Numbers)


DJIA 83 Emer Mkts 46 China 42, Brazil 51 Europe 54  Russia 69 
Japan 44, Korea 76, India 43, Australia 38  Germany 21, Spain 14 UK 59

Oil 65, Nat Gas 49, Gasoline 56,
Gold 39, Copper 54,  Silver 40, Platinum 46
Grains 70 DBC 66
Gold goes red

USD 70, Aussie 49, Euro 22 , Brit Pd 45, Yuan 61, Yen 62
Dollar holds at 50 day and turns up

US Industry Groups (relative strength)
 23 up, 6 Neutral, Downtrend 1 Score +21

Homebuilders (XHB) 61,  Real Estate (IYR) 57, Finance (XLF) 74, Insirance (IAK) 66 , Broker/Dealers ( IAI) 67, Retail (XRT) 52, Consumer Disc (XLY) 63, Consumer Staple (XLP) 56, Health (XLV) 66, Pharma (IHE) 62, Biotech (PBE ) 57, Transports (IYT) 63 Aerospace (ITA) 69, Shipping (SEA) 60, Airlines ($XAL) 61, ,Utilities (XLU) 53  , Metals and Mining( XME) 63, Copper (COPX) 55, Nat Gas Production (FCG ) 66,Oil Expl and Prod (IEO) 72, Oil Service (OIH) 60,  Coal (KOL) 79,  Energy (XLE) 70, Gold Miners (GDX) 39, Steel  (SLX) 69, Basic Mat (XLB) 69, Tech (XLK) 73, Semiconductors (SMH) 60, Software (SWH) 64, Networking (PXQ) 69



Bonds (Relative Strength)
 (1 up, 2 down, 4 neutral) Score -1

MUB (Natl Muni) 45 NCA(Ca Muni) 46 
BND (Total Bond Index) 38 BWX (International Treas Bonds) 41, PCY (Emerg Mkt Debt) 46 TLT (20+ US Treasuries) 40, IEF ( 10 yr Treasuries) 39, PFF (US preferred) 51, HYG (High Yield) 65,

The market remained in an uptrend as the NYSE has 610 net advances and the NASDAQ AD line hit a new high on 1102 net advances. Gold and Gold stocks slipped under their 50 day averages and are for now in a correction. Metals in general and commodity producing countries are showing declining relative strength. Bond markets showed weakness and the dollar resumed its uptrend.  The indicators are on the other hand screaming for a sell off. P/C was .33 with the 10 day at .64. We are just 7 days from expiration I wonder what they have up their sleeve.

Mikey
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