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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

Friday, March 18, 2011

Bouncing off the bottom as Options expire

DJIA 11858.52 +83.93 SPX 1279.20 +5.48 NASDAQ 2643.67 +7.62
Russell 2000 794.68 +9.14 DJT 5055.95 +36.71  DJU 400.18 +1.75 VIX 24.44
US Gov rates: 6 mo .1373   2 yr .5885% 10 yr 3.27 +.02 30 yr 4.41 +.04
IEF(US10 yr) 94.46 -.06 TLT (US LT)93.46 +.25 MUB (LT Natl Muni)100.23 -.02
BND (Total Bond Mkt)80.71 -.01 HYG (High Yield)91.18 +.43
Gold 1416.10 +11.90  Silver 35.06 +.79 Copper 4.34 -.01 Platinum 1723.40 +16.50
Oil 101.07 -.35 RBOB 2.94 -.01 Nat Gas  4.16 +.01
Aussie 99.98 +.0166 EURO 1.4114 +.0151 Pound 1.6128 +.0086
USD Index 75.97 DBC 29.72 +.17
Days to option expiration: 0
Notes: Strength in US treasuries, weakness in high yield bonds and assets

Long Term Opinions:

US Bonds: Major long term top forming. .... Current trend up
Muni Markets: Bottoming : Current trend Neutral
Stocks: At 2 year highs......  Current trend down
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 ..Slowing
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.
Notes: trend change in stocks and Bonds
Stock Market Trends

Mikey Short term down 3-14 11855
Mikey Intermediate Trend: Up 09/03/10 10477
Mikey Long term trend: UP 10/13/10 11052
Mikey current trend opinion: 3-15 Current trend down: 11855
IBD : IBD: 3-7 MARKET IN CORRECTION  12090


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) 62
Put/Call Ratio(.6 OB 1.2 OS) .95 10 day average .88
Ratio Put Premiums to Call Premium (..34 to 2.5)  .89     10 day ave .79
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -58.23 weekly -60.94
Bulls 52.2   Bears 22.3 Bull/Bear ratio 2.34 Bullish
Mikey Thrust indicator: Daily 4 Weekly 4 (1 low, 10 max)8, -0
DJIA MACD -62.40(below 0 line) Falling/Negative Cross  2-22
NYSE New Highs 63(12/7 429)  New Lows 54
NASDAQ New Highs 62(12-7 352) New Lows 105(new lows / new highs )
NYSE Advance-Decline +1308 NASDAQ Advance-Decline +943
Mikey A/D line NYSE (3/3 25358)+21373 NASDAQ (2-18 10095) +3895
NYSE % above 200 day ave  69%

Support: 1182 SPX, 11200 DJIA Breakout 9/20
Resistance: 1300 SPX; 12000 DJIA

Comments:
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
3-1 Reversal day big distribution day 3rd in month
IBD Uptrend under pressure 12058
3-2 Weak bounce
3-8 IBD Market in correction
3-11 DJI Hits 50 day NASDAQ breaks 50 day at Jan lows
3-12 bounces off 50 day
3-14 Hard break of 50 day. Mikey trend change ..down
3-16 US long bonds uptrend

Moving Averages

5 day 11818 Falling/Price above
20 day 12066 Falling/Price below
50 day 12015  Rising/Price below
90 day 11727  Rising/Price above
200 day 11065  Rising/Price above
20 week 11724 Rising/Price above
50 week 11010 Rising/ Price above
90 week 10536 Rising/Price above
200 week 10873 Flat/Price above

Trends Green up, Red Down, Black neutral

World Markets (Power Numbers) Ave score  41
DJIA 42 Canada 54 Latin Amer 36 Mexico 40 Brazil 50
Europe 32 UK 31 Germany 26 Spain 49 Russia 47
China 54 Japan 23 Korea 46
Singapore 29 Taiwan 45 India 54 Australia 42
Emer Mkts 61 Total World market Index 28

Commodities (Power Numbers)
Oil 53 Nat Gas 48, Gasoline 48
Gold 68 Copper 34 Silver 67, Platinum 51
Grains 40 DBC 63

Currencies (Power Numbers)
USD 40 Aussie 32 Euro 68 , Brit Pd 62 Yuan 45 Yen 68  

US Industry Groups (relative strength) Ave Score 43
0 up, 26 Neutral, 9 Downtrend Score -9

Homebuilders (XHB) 51, Real Estate (IYR) 49, Finance (XLF) 45 Regional Banks (IAT) 45 Insurance (IAK) 41 , Broker/Dealers ( IAI) 38, Retail (XRT) 44 Consumer Disc (XLY) 39  Telecom (IYZ) 47 Consumer Staple (XLP)41  Health (XLV) 44, Pharma (IHE) 44, Biotech (PBE ) 40, Transports (IYT) 42 Aerospace (ITA) 45, Shipping (SEA) 36, Airlines ($XAL) 41, ,Utilities (XLU) 34 , Metals and Mining( XME) 47, Copper (COPX) 45, Nat Gas Production (FCG ) 58 Oil Expl and Prod (IEO) 54 Oil Service (OIH) 48, Coal (KOL) 56, Energy (XLE) 50, Gold Miners (GDX) 45 Steel (SLX) 45 Basic Mat (XLB) 44 Timber (Wood) 50 AgriBusiness (MOO) 41, Tech (XLK) 34, Semiconductors (SMH) 37, Software (SWH) 40 Networking (PXQ) 36 Internet (FDN) 36

Bonds (Relative Strength)
(4 up,  down, 5 neutral) Score 4
MUB (Natl Muni) 54 NCA(Ca Muni) 54 BND (Total Bond Index) 64 BWX (International Treas Bonds) 67, PCY (Emerg Mkt Debt) 51 TLT (20+ US Treasuries) 60, IEF ( 10 yr Treasuries) 62, PFF (US preferred) 51, HYG (High Yield) 48

Put options went to options heaven today as the finishing touches were painted by the Fed selling dollars and the Investment bankers manipulating stocks. The sell off was the primary sell off and the first shot across the bow that sets up the decline. Today we are barely out of oversold and the red groups dropped to 9. This was the beginning of the decline but there is room to work in both directions now. I am looking to short but want the Put/call ratio to be lower than the .95 today. I would also like the DJI to show more green numbers.

Mikey
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