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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, February 15, 2011

Of Liars and Poker Faces

DJIA 12226.64 -41.55 SPX 1328.01 -4.31 NASDAQ 2804.35 -12.83
Russell 2000 820.03 -5.87 DJT 5231 +13.14 DJU  410.71 +.95 VIX 16.37  
US Gov rates: 6 mo .152%  2 yr .8351% 10 yr 3.62 -.02  30 yr 4.68 uch
Gold 1373.30 +8.20 Silver 30.70 +.16  Copper 4.53 -.10 Platinum 1831.60 +4.00
Oil 84.32 -.39  RBOB 2.49 -.03 Nat Gas 3.97 +.05
Aussie .9976 -.0073 EURO 1.3433 -.0001 Pound 1.6026 +.0082
USD Index 78.66 -.05 DBC 28.43 -.36
Days to option expiration: 3

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 down
Silver: Blow out top....Current trend up
Oil : Secondary bear market rally ending..... Current trend Neutral
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) .94  Overbought
Put/Call Ratio(.6 OB 1.2 OS)..70   10 day average .73
Ratio Put Premiums to Call Premium (..34 to 2.5) .48...Low put Premium   
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -12.66 weekly 4.51
Bulls 53.4  Bears 23.3 Bull/Bear ratio 2.29 Bullish
Mikey Thrust indicator: Daily 9 Weekly 10 (1 low, 10 max) 19, -1 ...At the top
DJIA MACD 160.74  Falling /Positive cross 1-18
NYSE New Highs 212(12/7 429)  New Lows 12
NASDAQ New Highs 144 (12-7 352) New Lows 20
NYSE Advance-Decline -697 NASDAQ Advance-Decline -620
Mikey A/D line (2/14 22254). NYSE 21827  NASDAQ ( 2-14, 9290 ) +8670
NYSE % above 200 day ave  79%

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
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
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

Moving Averages

5 day 12247 Falling/Price below
20 day 12051 Rising/ Price above 
50 day 11783 Rising/Price above
200 day 10882 Rising/Price above
20 week 11523 Rising/Price above
50 week 10906 Rising/Price above
90 week 10383 Rising/Price above
200 week 10898 Rising/Price above

Trends Green up, Red Down, Black neutral

World Markets (Power Numbers) Ave score 53
DJIA 67, Canada 67 
Latin Amer 44 Mexico 34 Brazil 41
Europe 74 UK 69 Germany 73 Spain 63  Russia 54 
China 44 Japan 57  Korea 41, Singapore 36, Taiwan 35  India 47 Australia 49
Emer Mkts 45 Total World market Index 68

Commodities (Power Numbers)
Oil 39, Nat Gas 16, Gasoline 64
Gold 59 Copper 72 Silver 81, Platinum 57
Grains 57 DBC 67


Currencies (Power Numbers)
USD 41, Aussie 51 Euro 52 , Brit Pd 60, Yuan 55, Yen 27

US Industry Groups (relative strength) Ave Score  60
21 up, 14 Neutral, Downtrend 0 Score +21

Homebuilders (XHB) 53,  Real Estate (IYR) 66, Finance (XLF) 65, Regional Banks (IAT) 64, Insurance (IAK) 59 , Broker/Dealers ( IAI) 69, Retail (XRT) 67, Consumer Disc (XLY) 69, Telecom (IYZ) 62, Consumer Staple (XLP) 53, Health (XLV) 59, Pharma (IHE) 56, Biotech (PBE ) 51, Transports (IYT) 61 Aerospace (ITA) 68, Shipping (SEA) 49, Airlines ($XAL) 50, ,Utilities (XLU) 52 , Metals and Mining( XME) 62, Copper (COPX) 52, Nat Gas Production (FCG ) 62, Oil Expl and Prod (IEO) 65 Oil Service (OIH) 65,  Coal (KOL) 49,  Energy (XLE) 67, Gold Miners (GDX) 55 Steel  (SLX) 57, Basic Mat (XLB) 60, Timber (Wood) 63 AgriBusiness (MOO) 56, Tech (XLK) 63, Semiconductors (SMH) 69, Software (SWH) 61 Networking (PXQ) 68, Internet (FDN) 68



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

MUB (Natl Muni) 54 NCA(Ca Muni) 44 
BND (Total Bond Index) 37 BWX (International Treas Bonds) 44, PCY (Emerg Mkt Debt) 27 TLT (20+ US Treasuries) 46, IEF ( 10 yr Treasuries) 42, PFF (US preferred) 68, HYG (High Yield) 57

The market is chugging its way to new multi year highs on a daily basis. On the other hand, China, is doing its best to slow down its economy as commodity prices are putting a big dent in its profits. The US is talking budget cuts and a reduction in its deficit. Europe is moving from debt crisis to debt crisis and all the austerity measures that go with it.
Through it all, the European market, just like the US market, is at 2.5 year highs. New price highs breed bullishness and it is showing up in the Bull/Bear numbers. If you are in to fundamentals, the housing market rolled over and is heading for its lows again. The employment number have improved but mainly because the powers that be changed the base and that has been widely published.  
Net Net the only thing that has improved is the corporate bank accounts, which I guess is reason enough to push stocks higher. In the end,  the corporations depend on a good economy and this one is anything but that. At some point, the system will call BS on itself and they will all scurry to leave the sinking ship. The game now is liars poker. When the game is over it will show up in the technicals. To this point there there are nothing but liars and poker faces.

Mikey
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