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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 26, 2011

S&P and Nasdaq hit 2 year highs

DJIA 11985.44 +8.25 SPX  1296.63 +5.45 NASDAQ 2739.50 +20.25  
DJT 5106.75 +56.16  413.39 -1.19 VIX 16.64  
US Gov rates: 6 mo .173%  2 yr .625% 10 yr 3.41 30 yr  4.58 +.09
Gold 1330.00 -2.30  Silver 27.13 +.32 Copper 4.27 +.04 Platinum 1796.90 +7.60
Oil87.33 +1.14 RBOB 2.46 +.09 Nat Gas 4.48 +.01
Aussie 1.0005 +.009 EURO 1.3635 +.0007 Pound 1.5805 +.0175
USD Index 78.03 -.11 DBC 27.98 +.61
Days to option expiration: 22

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- 26 Uptrend resumes



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) .93
Put/Call Ratio(.6 OB 1.2 OS).72
10 day average .74
Ratio Put Premiums/Call Premium  (extremes .60/ 1.54) .
Put Premium 10 day average .4
Sentiment Total Score: Put/call + premium ratio = 
10 day Sentiment Total Score: Put/call + premium ratio =
Daily-Weekly=
Williams %R 12 day -.1.93 weekly -.73
Bulls 56 Bears 20.9 Bull/Bear ratio 2.67
Mikey Thrust indicator: Daily 10 Weekly 10 (1 low, 10 max) 20
DJIA MACD 131.60  up/Positive cross 1-18
NYSE New Highs 249 (Lagging)New Lows 9
NASDAQ New Highs 157(Lagging) New Lows 13
NYSE Advance-Decline +1179  NASDAQ Advance-Decline +1346
Mikey A/D line.(from 9/17/10). NYSE 17814 ( New High) NASDAQ +7708 (Lagging)
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:
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
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

Moving Averages

5 day 11927 Rising/Price above
20 day 11733 Rising/ Price above 
50 day 11196 Rising/Price above
200 day 10812 Rising/Price above
20 week 11239 Rising/Price above
50 week 10765 Rising/Price above
90 week 10218 Rising/Price above
200 week 10908 Flat/Price above

World Markets (Power Numbers) Ave score 48
DJIA 68 Emer Mkts 32 China 38, Brazil 33 Europe 46  Russia 50  Japan 59 Korea 42, India 38, Australia 51  Germany 65, Spain 74  UK 30

Commodities (Power Numbers)
Oil 35, Nat Gas 44, Gasoline 49,
Gold 38, Copper 37,  Silver 29, Platinum 56
Grains 47 DBC 62


Currencies (Power Numbers)
USD 34, Aussie 38 Euro 67 , Brit Pd 66, Yuan 45, Yen 70

US Industry Groups (relative strength) Ave Score 58
11 up, 21 Neutral, Downtrend 1 Score +10
Homebuilders (XHB) 65,  Real Estate (IYR) 65, Finance (XLF) 58, Insurance (IAK) 63 , Broker/Dealers ( IAI) 58, Retail (XRT) 44, Consumer Disc (XLY) 62, Telecom (IYZ) 58, Consumer Staple (XLP) 62, Health (XLV) 57, Pharma (IHE) 52, Biotech (PBE ) 52, Transports (IYT) 50 Aerospace (ITA) 74, Shipping (SEA) 31, Airlines ($XAL) 48, ,Utilities (XLU) 61 , Metals and Mining( XME) 57, Copper (COPX) 51, Nat Gas Production (FCG ) 65, Oil Expl and Prod (IEO)62 Oil Service (OIH) 69,  Coal (KOL) 52,  Energy (XLE) 71, Gold Miners (GDX) 41, Steel  (SLX) 62, Basic Mat (XLB) 59, AgriBusiness (MOO) 59, Tech (XLK) 69, Semiconductors (SMH) 68, Software (SWH) 67 Networking (PXQ) 48, Internet (FDN) 47



Bonds (Relative Strength)
 (1 up, 1 down, 7 neutral) Score 0

MUB (Natl Muni) 54 NCA(Ca Muni) 48 
BND (Total Bond Index) 46 BWX (International Treas Bonds) 60, PCY (Emerg Mkt Debt) 36 TLT (20+ US Treasuries) 43, IEF ( 10 yr Treasuries) 45, PFF (US preferred) 58, HYG (High Yield) 67

The Fed met and said they would not change anything. The risk trade popped up again today.Average for the NAS and S&P made 2 year highs. IBD went to market resumes uptrend. I am still cautious. I am not buying short ETF other than Gold Silver and Oil. They all bounced on the Fed new today.
The dollar is being held back to fascilitate the Euro bond rally. Look for a sharp bounce in Gold and Silver.
.

Mikey
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