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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 22, 2011

A very big down day

DJIA 12212.79 -178.46 SPX 1315.44 -27.57 NASDAQ 2746.42 -77.53
Russell 2000 812.96 -21.86 DJT 5093.23 -202.97 DJU  410.84 -.79 VIX 20.80
US Gov rates: 6 mo .142%  2 yr .7472% 10 yr 3.47 -.11 30 yr 4.60 -.09
Gold 1400.10 Silver 32.87 +.58 Copper 4.34 -.14  Platinum 1785.30 -59.30
Oil 93.57 +7.37 RBOB 2.60 +.05 Nat Gas 3.88 +.01
Aussie 1.0006 -.0164 EURO 1.3598 -.0034 Pound 1.6036 -.0101
USD Index 77.636 -.06  DBC 28.65 -.04
Days to option expiration: 19

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) .77 
Put/Call Ratio(.6 OB 1.2 OS)..95   10 day average .75
Ratio Put Premiums to Call Premium (..34 to 2.5)  .56     10 day ave .53
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -48.83 weekly .16.71
Bulls 53.4  Bears 23.3 Bull/Bear ratio 2.29 Bullish
Mikey Thrust indicator: Daily 5 Weekly 8 (1 low, 10 max) 13, -3
DJIA MACD 153.56   Falling/Negative Cross  2-22
NYSE New Highs 132 (12/7 429)  New Lows 15
NASDAQ New Highs 83 (12-7 352) New Lows 35
NYSE Advance-Decline -2364 ( 8 to 1) NASDAQ Advance-Decline -1929 (6 TO 1)
Mikey A/D line (2/18 24526). NYSE 22162  NASDAQ ( 2-18, 10095 ) +8166
NYSE % above 200 day ave  77%

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 12287 Falling/Price below
20 day 12137 Rising/ Price above 
50 day 11837 Rising/Price above
200 day 10915 Rising/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 51
DJIA 74, Canada 66
Latin Amer 47 Mexico 32 Brazil 45
Europe 65 UK 67 Germany 66 Spain 51  Russia 37 
China 39 Japan 66  Korea 33, Singapore 39, Taiwan 40  India 51 Australia 56
Emer Mkts 46 Total World market Index 54



Commodities (Power Numbers)
Oil 39, Nat Gas 10, Gasoline 73
Gold 67 Copper 38 Silver 74, Platinum 41
Grains 32 DBC 48

Note: Grains and Copper go red

Currencies (Power Numbers)
USD 52  Aussie 64 Euro 39 , Brit Pd 52, Yuan 69, Yen 34

US Industry Groups (relative strength) Ave Score  50
3 up, 29 Neutral, Downtrend 3 Score +0

Homebuilders (XHB) 47,  Real Estate (IYR) 61, Finance (XLF) 49, Regional Banks (IAT) 49 Insurance (IAK) 56 , Broker/Dealers ( IAI) 51, Retail (XRT) 57, Consumer Disc (XLY) 56, Telecom (IYZ) 41, Consumer Staple (XLP) 56, Health (XLV) 57, Pharma (IHE) 45, Biotech (PBE ) 42, Transports (IYT) 46 Aerospace (ITA) 49, Shipping (SEA) 38, Airlines ($XAL) 34, ,Utilities (XLU) 48 , Metals and Mining( XME) 48, Copper (COPX) 37, Nat Gas Production (FCG ) 59, Oil Expl and Prod (IEO) 57 Oil Service (OIH) 63,  Coal (KOL) 41,  Energy (XLE) 68, Gold Miners (GDX) 59 Steel  (SLX) 58/, Basic Mat (XLB) 44, Timber (Wood) 47 AgriBusiness (MOO) 42, Tech (XLK) 43, Semiconductors (SMH) 55, Software (SWH) 54 Networking (PXQ) 52, Internet (FDN) 47



Note: 1 day turns industry groups neutral


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

MUB (Natl Muni) 54 NCA(Ca Muni) 39 
BND (Total Bond Index) 53 BWX (International Treas Bonds) 60, PCY (Emerg Mkt Debt) 31 TLT (20+ US Treasuries) 52, IEF ( 10 yr Treasuries) 54, PFF (US preferred) 56, HYG (High Yield) 51
Note: Strength in US LT bonds weakness in High Yield and Preferred


Still too early to call... lets see if there is a follow through. Usually these sell off produce a sell signal that then produces a bounce back. A trip below the 50 day would be the first step. The 50 day is at 11850 now. The last breakout was at 11500. Somewhere between the 2 would be support for the first sell off. Watch for the red numbers in the industry groups. IBD went to uptrend under pressure today on the close the 3rd time since 1/20

Mikey
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