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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, March 15, 2011

Primary break down

DJIA 11855.42 -137.74 SPX 1281.87 -14.52 NASDAQ 2667.33 -33.64
Russell 2000 791.33 -6.84 DJT 5019.74 -33.78 DJU 404.40 -7.64 VIX 24.32
US Gov rates: 6 mo .1628   2 yr .60% 10 yr 3.31 +.09 30 yr 4.44 uc
IEF(US10 yr) 93.67 +.22 TLT (US LT) 92.88 +1.37 MUB (LT Natl Muni)100.03 +.23  
BND (Total Bond Mkt)80.46 +.05 HYG (High Yield)90.34 -.47 
Gold 1392.80 -32.10 Silver 34.11 -1.72 Copper 4.14 -.04 Platinum 1705.60 -46.70
Oil 101.19 +.03 RBOB 2.80 -.10  Nat Gas  3.94
Aussie 99.26 -.0193 EURO 1.3941 -.0003  Pound 1.5981 -.0103
USD Index 76.85 -.18 DBC 28.49 -1.08
Days to option expiration: 4

Long Term Opinions:

US Bonds: Major long term top forming. .... Current trend Neutral
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.

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: 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) 63
Put/Call Ratio(.6 OB 1.2 OS) 1.03  10 day average .85
Ratio Put Premiums to Call Premium (..34 to 2.5)  .83     10 day ave .74
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -7290 weekly -4560
Bulls 52.2   Bears 21.1 Bull/Bear ratio 2.47 Bullish
Mikey Thrust indicator: Daily 3 Weekly 5 (1 low, 10 max) 8, -2
DJIA MACD -3.68 (below 0 line) Falling/Negative Cross  2-22
NYSE New Highs 27 (12/7 429)  New Lows 78 (more new lows than highs)
NASDAQ New Highs 23 (12-7 352) New Lows 131 (new lows / new highs 6/1)
NYSE Advance-Decline -1738 NASDAQ Advance-Decline -1336
Mikey A/D line NYSE (3/3 25358)+20293 NASDAQ (2-18 10095) +3553
NYSE % above 200 day ave  70%

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

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
Moving Averages

5 day 12018 Falling/Price below
20 day 12145 Falling/Price below
50 day 12012  Rising/Price below
90 day 11716  Rising/Price above
200 day 11041  Rising/Price above
20 week 11687 Rising/Price above
50 week 10991 Rising/ Price above
90 week 10498 Rising/Price above
200 week 10882 Flat/Price above

Trends Green up, Red Down, Black neutral

World Markets (Power Numbers) Ave score  43
DJIA 34 Canada 50 Latin Amer 48 Mexico 48 Brazil 73
Europe 27 UK 21 Germany 25 Spain 25 Russia 58
China 67 Japan 10 Korea 41
Singapore 27 Taiwan 50 India 60 Australia 49
Emer Mkts 75 Total World market Index 26

Commodities (Power Numbers)
Oil 43 Nat Gas 51, Gasoline 54
Gold 65 Copper 29 Silver 68, Platinum 50
Grains 39 DBC 65

Currencies (Power Numbers)
USD 38 Aussie 51 Euro 73 , Brit Pd 41 Yuan 38, Yen 67

US Industry Groups (relative strength) Ave Score 45
0 up, 31 Neutral, 6 Downtrend Score -6

Homebuilders (XHB) 46, Real Estate (IYR) 49, Finance (XLF) 45 Regional Banks (IAT) 43 Insurance (IAK) 42 , Broker/Dealers ( IAI) 39, Retail (XRT) 51 Consumer Disc (XLY) 46  Telecom (IYZ) 39 Consumer Staple (XLP) 49  Health (XLV) 50, Pharma (IHE) 42, Biotech (PBE ) 39, Transports (IYT) 47 Aerospace (ITA) 47, Shipping (SEA) 40, Airlines ($XAL) 45, ,Utilities (XLU) 51 , Metals and Mining( XME) 46, Copper (COPX) 36, Nat Gas Production (FCG ) 53 Oil Expl and Prod (IEO) 51 Oil Service (OIH) 49, Coal (KOL) 52, Energy (XLE) 50, Gold Miners (GDX) 48 Steel (SLX) 44  Basic Mat (XLB) 42 Timber (Wood) 47 AgriBusiness (MOO) 36, Tech (XLK) 40, Semiconductors (SMH) 39, Software (SWH) 42 Networking (PXQ) 43 Internet (FDN) 41

Bonds (Relative Strength)
(1 up, 0 down, 8 neutral) Score 1

MUB (Natl Muni) 50 NCA(Ca Muni) 46 BND (Total Bond Index) 62 BWX (International Treas Bonds) 63, PCY (Emerg Mkt Debt) 49 TLT (20+ US Treasuries) 53, IEF ( 10 yr Treasuries) 58, PFF (US preferred) 53, HYG (High Yield) 37

Blame it on Japan but the fact is that there is a change in the markets now. Lower quality debt is in the tank now. The word is that the Fed is no longer going to be supporting the bond market. That's interesting because while they supported it the yields ran from 3.46 to 4.78% that is a 38% increase in the long term interest rates. Now that they are not supporting the bonds what will happen? Lower rates????

The other interesting change is that the Oil and Gasoline markets have reversed. RBOB as dropped a cool 30 cents in that last week and oil is now 8 bucks lower during that time. Gold was down 32 today and silver was hit 1.72. The A/D line for the NASDAQ has completely broken down and there are 131 new lows and only 23 new highs today. The NYSE is stronger but today the new lows outnumber new highs 78 to 27.

The MACD line is below zero so I am assigning a sell signal to the market now. I still think that there could be are fast trip back to the top, though. The news is so bad that I think they are buying stock here and will need to rally next week to toast the put buyers. The Put/call ratio is over 1 at 1.03 and the last time it hit this number the market rallied. So even though I think this is it,  nothing goes in a straight line because market mechanics dictate a zig zag price movement. The bottom line is that things have appeared to have changed.

There are no groups in uptrend and 6 in downtrends the majority are neutral with most in the 40's nearing a sell signal. The Aussie dollar, which seems to be tied at the hip with the US stock market was smoked today to the tune of 200 pips. That is a 2 month low. It seems to call the tune for alot of things including oil, Gold and silver.

Mikey






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