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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 17, 2011

The real economy....Bust public unions

DJIA 12318.14 +29.97 SPX 1340.43 +4.11 NASDAQ 2831.58 +6.02
Russell 2000 834.02 +5.65 DJT 5298.10 +12.58 DJU  411.23 +2.04 VIX 16.59
US Gov rates: 6 mo .137%  2 yr .7795% 10 yr 3.59 -.03 30 yr 4.69 +.01
Gold 1385.10 Silver 31.57 Copper 4.48 Platinum 1844
Oil 86.36   RBOB 2.52 Nat Gas 3.86
Aussie 1.0134 +.0078 EURO 1.3553 +.0036 Pound 1.6072 +.0074
USD Index 78.06 DBC 28.72 +.09
Days to option expiration: 2
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 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)..74       10 day average .72
Ratio Put Premiums to Call Premium (..34 to 2.5) .51      10 day ave .55
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -3.71 weekly 1.08
Bulls 53.4  Bears 23.3 Bull/Bear ratio 2.29 Bullish
Mikey Thrust indicator: Daily 10 Weekly 10 (1 low, 10 max) 20, -1 ...At the top
DJIA MACD 161.79 Rising/Positive cross 1-18
NYSE New Highs 373(12/7 429)  New Lows 10
NASDAQ New Highs 210 (12-7 352) New Lows 12
NYSE Advance-Decline +742 NASDAQ Advance-Decline +522
Mikey A/D line (2/14 24080 ). NYSE +24080  NASDAQ ( 2-14, 9290 ) +10033
NYSE % above 200 day ave  80%

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 12274  Rising/Price below
20 day 12099 Rising/ Price above 
50 day 11800 Rising/Price above
200 day 10896 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 66, Canada 68 
Latin Amer 53 Mexico 34 Brazil 48
Europe 71 UK 71 Germany 73 Spain 60  Russia 52 
China 44 Japan 62  Korea 32, Singapore 39, Taiwan 37  India 51 Australia 49
Emer Mkts 49 Total World market Index 65


Commodities (Power Numbers)
Oil 45, Nat Gas 16, Gasoline 70
Gold 69 Copper 59 Silver 83, Platinum 55
Grains 50 DBC 66


Currencies (Power Numbers)
USD 44, Aussie 73 Euro 47 , Brit Pd 54, Yuan 63, Yen 39

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

Homebuilders (XHB) 63,  Real Estate (IYR) 69, Finance (XLF) 67, Regional Banks (IAT) 59, Insurance (IAK) 63 , Broker/Dealers ( IAI) 70, Retail (XRT) 67, Consumer Disc (XLY) 72, Telecom (IYZ) 58, Consumer Staple (XLP) 63, Health (XLV) 64, Pharma (IHE) 62, Biotech (PBE ) 53, Transports (IYT) 65 Aerospace (ITA) 65, Shipping (SEA) 55, Airlines ($XAL) 52, ,Utilities (XLU) 49 , Metals and Mining( XME) 65, Copper (COPX) 50, Nat Gas Production (FCG ) 66, Oil Expl and Prod (IEO) 68 Oil Service (OIH) 70,  Coal (KOL) 53,  Energy (XLE) 70, Gold Miners (GDX) 60 Steel  (SLX) 60, Basic Mat (XLB) 65, Timber (Wood) 67 AgriBusiness (MOO) 60, Tech (XLK) 67, Semiconductors (SMH) 71, Software (SWH) 65 Networking (PXQ) 69, Internet (FDN) 69



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

MUB (Natl Muni) 57 NCA(Ca Muni) 49 
BND (Total Bond Index) 47 BWX (International Treas Bonds) 56, PCY (Emerg Mkt Debt) 33 TLT (20+ US Treasuries) 45, IEF ( 10 yr Treasuries) 45, PFF (US preferred) 67, HYG (High Yield) 60

Wis. state Senate Democrats didn’t show up for work, denying the GOP   majority a quorum to vote on a bill to strip public employee unions of most collective bargaining rights. State police searched for them. Union-led protests flooded the state capitol building, with “sick” teachers shutting down schools in Madison and elsewhere for a 2nd day. Governors red and blue are taking on unions across the country.
 
Tens of thousands of teachers, nurses and other state employees had flooded the Legislature in angry demonstrations demanding the bill championed by new Republican Gov. Scott Walker be quashed. The measure was expected to pass, but Democrats’ disappearance left the legislature short of the quorum needed to proceed.
 
The battle could have an impact well beyond Wisconsin as other governors — Republican and Democratic — such as New Jersey’s Chris Christie, New York’s Andrew Cuomo, Indiana’s Mitch Daniels, California’s Jerry Brown, Ohio’s John Kasich and New Mexico’s Susana Martinez, embark on their own efforts to scale back state government in the face of staggering budget deficits and massive unfunded pension obligations.

Those battles are often pitting them against public employee unions, which are determined to preserve their members’ existing pay and benefits, no matter what the cost to taxpayers and government services.

According to the liberal Center on Budget and Policy Priorities, the states cumulatively face a $125 billion budget deficit. The states in the most trouble include New York, which faces a $9 billion shortfall. New Jersey faces $10.5 billion in red ink. Illinois faces a $15 billion hole.

“The real problem with state budgets is the impact of the recession on state revenues,” said Elizabeth McNichol, senior fellow at the Center on Budget and Policy Priorities, noting they are down 11% from pre-recession levels. It will take a while for the states to get back to those levels, she adds. Federal stimulus funds cushioned the initial blow but are now running out.
 
Recession, what recession. We are in a recovery aren't we???
 
Mikey
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