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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

Thursday, February 24, 2011

DJI holds near 20 day rest of market at 50 day

DJIA 12015.78 -107.01 SPX 1307.40 -8.04 NASDAQ 2722.99 -33.43  
Russell 2000 799.65 -13.31 .86 DJT 4986.21 -107.22 DJU  409.37 -.97  VIX 22.13
US Gov rates: 6 mo .142%  2 yr .7472% 10 yr 3.48 +.01 30 yr 4.58 -.02
Gold 1414 +13.90  Silver 33.30 +.43 Copper 4.28 -.06  Platinum 1776.70 -8.60
Oil 98.10 +4.53 RBOB 2.72 +.12 Nat Gas 3.90 +.02
Aussie 1.0042 +.0036 EURO 1.3691 +.0093 Pound 1.6115 +.0075
USD Index 77.44 -.19 DBC 29.29 +.64
Days to option expiration: 18
Long Term Opinions:

US Bonds: Major long term top forming. .... Current trend down
Muni Markets: Bottoming : Current trend down
Stocks: At 2 year highs......  Current trend up 
Gold: Primary top forming .....  Current trend up
Silver: Blow out top....Current trend up
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: Long term bottom forming .Current Trend down
US Economy: Proped up with debt.....Current trend up
China: Accident waitng to happen.. Current trend down
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, US Stocks.

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 : Uptrend resumes 2-1


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) .71 
Put/Call Ratio(.6 OB 1.2 OS)..85   10 day average .77
Ratio Put Premiums to Call Premium (..34 to 2.5)  .72     10 day ave .55
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -86.26  weekly 26.57
Bulls 53.3  Bears 18.9 Bull/Bear ratio 2.82 Bullish
Mikey Thrust indicator: Daily 1 Weekly 7 (1 low, 10 max) 8, -6
DJIA MACD 133.81 Falling/Negative Cross  2-22
NYSE New Highs 60 (12/7 429)  New Lows 27
NASDAQ New Highs 43 (12-7 352) New Lows 44 (3 month high)
NYSE Advance-Decline -897  NASDAQ Advance-Decline --1367
Mikey A/D line (2/18 24526). NYSE +21625  NASDAQ ( 2-18, 10095 ) +6799
NYSE % above 200 day ave  75%

Support: 1190 SPX, 11200 DJIA Breakout 9/20
Resistance: 1313 SPX; 13136 DJIA
Downside reversal 1270 SPX, DJIA 11800, NASDAQ 2679

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
1-5 Gold sell signal
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 confirmed by AD Line.
1-12 Dollar sell signal
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
1-24 Oil sell signal
1-25 Consumer confidence strong, State of the Union message..over hall 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
2-1 IBD uptrend resumes (3 rd change in past month)
2-3 Cramer says Gold decline over
2-4 DJI 4 th closing high in a row, NASDAQ closes at a new high, Transports 4% off highs
NASDAQ AD line lagging
2-16 Gold buy signal
2-18 options expire
2-21 Consumer confidence strong
2-22 IBD Uptrend under pressure 12212
2-22 MACD negative cross

Moving Averages

5 day 12263 Falling/Price below
20 day 12143 Rising/ Price below
50 day 11851 Rising/Price above
200 day 10921Rising/Price above
20 week 11452 Rising/Price above
50 week 10908 Rising/Price above
90 week 10385 Rising/Price above
200 week 10898 Rising/Price above

Trends Green up, Red Down, Black neutral

World Markets (Power Numbers) Ave score 48
DJIA 68, Canada 59 Latin Amer 45 Mexico 32 Brazil 42
Europe 55 UK 61 Germany 63 Spain 51  Russia 45
China 36 Japan 62  Korea 19, Singapore 36, Taiwan 36  India 48 Australia 53
Emer Mkts 43 Total World market Index 51



Commodities (Power Numbers)
Oil 51, Nat Gas 17, Gasoline 78
Gold 76 Copper 39 Silver 86, Platinum 38
Grains 33 DBC 57

Note: Grains and Copper go red

Currencies (Power Numbers)
USD 40  Aussie 62 Euro 45 , Brit Pd 59, Yuan 63, Yen 40

US Industry Groups (relative strength) Ave Score  47
5 up, 29 Neutral, Downtrend 5 Score +0

Homebuilders (XHB) 43,  Real Estate (IYR) 55, Finance (XLF) 47, Regional Banks (IAT) 45 Insurance (IAK) 53 , Broker/Dealers ( IAI) 48, Retail (XRT) 49, Consumer Disc (XLY) 48, Telecom (IYZ) 34, Consumer Staple (XLP) 53, Health (XLV) 44, Pharma (IHE) 37, Biotech (PBE ) 35, Transports (IYT) 40 Aerospace (ITA) 43, Shipping (SEA) 40, Airlines ($XAL) 29, ,Utilities (XLU) 46 , Metals and Mining( XME) 48, Copper (COPX) 35, Nat Gas Production (FCG ) 69, Oil Expl and Prod (IEO) 67 Oil Service (OIH) 65,  Coal (KOL) 45,  Energy (XLE) 73, Gold Miners (GDX) 63 Steel  (SLX) 41/, Basic Mat (XLB) 45, Timber (Wood) 41 AgriBusiness (MOO) 41, Tech (XLK) 41, Semiconductors (SMH) 48, Software (SWH) 50 Networking (PXQ) 47, Internet (FDN) 40



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

MUB (Natl Muni) 56 NCA(Ca Muni) 42 
BND (Total Bond Index) 53 BWX (International Treas Bonds) 60, PCY (Emerg Mkt Debt) 30 TLT (20+ US Treasuries) 54, IEF ( 10 yr Treasuries) 52, PFF (US preferred) 55, HYG (High Yield) 52

Oils are holding the averages up especially the DJI. Most stocks have made a quick trip to the 50 day so the most published average is not showing the kind of weakness that the overall market is showing. The end game always has the oils showing relative strength and you can see by the industry groups that is the case here. You can get a clearer picture by watching the industry group rotation.

Mikey
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