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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, March 3, 2011

The good ship market is lurching in the high waves

DJIA 12258.20 +191.40  SPX 1330.97 +22.53  NASDAQ 2798.74 +50.67  
Russell 2000 829.89 +17.99 DJT 5111.22 +123.44  DJU 414.95 +3.50  VIX 18.60 
US Gov rates: 6 mo .152%  2 yr .7763% 10 yr 3.55 +.07 30 yr 4.60 +.02
IEF(US10 yr) 92.14 -.63 TLT (US LT) 90.06 -.89 MUB (LT Natl Muni)100.31 +.11 
BND (Total Bond Mkt) 79.62 -.32 HYG (High Yield) 92.19 +.33
Gold 1416.30 -23.30   Silver 34.33 -.49 Copper 4.48 uch Platinum 1833 -26.30
Oil 101.91 -.32 RBOB 3.03 +.01 Nat Gas 3.76 -.06
Aussie 1.0163 -.0006 EURO 1.3904 +.0095 Pound 1.6172 -.0056
USD Index 76.49 -.20 DBC 30.28 -.01
Days to option expiration: 12

Long Term Opinions:

US Bonds: Major long term top forming. .... Current trend down
Muni Markets: Bottoming : Current trend Neutral
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 ..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: 1-21 (DJI 11871) The caution light is on for this uptrend :
IBD : Uptrend under pressure 3-1



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) ..86
Put/Call Ratio(.6 OB 1.2 OS).78  10 day average .84
Ratio Put Premiums to Call Premium (..34 to 2.5)  .74     10 day ave .66
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -79.20  weekly -32.91
Bulls 50.6  Bears 19.5 Bull/Bear ratio 2.59 Bullish
Mikey Thrust indicator: Daily 2 Weekly 7 (1 low, 10 max) 9, -5
DJIA MACD 73.91  Rising/Negative Cross  2-22
NYSE New Highs 230 (12/7 429)  New Lows 6
NASDAQ New Highs 154 (12-7 352) New Lows 20
NYSE Advance-Decline +1904 NASDAQ Advance-Decline +1419
Mikey A/D line NYSE (3/3 25358)+25358  NASDAQ (2-18 10095) +9217
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
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
3-1 Reversal day Gig distribution day 3rd in month
IBD Uptrend under pressure 12058
3-2 Weak bounce

Moving Averages

5 day 12079 Falling/Price above
20 day 12186  Rising/Price above
50 day 11927 Rising/Price above
90 day 11642 Rising/Price above
200 day 10964  Rising/Price above
20 week 11583  Rising/Price above
50 week 10965 Rising/ Price above
90 week 10421 Rising/Price above
200 week 10893 Rising/Price above

Trends Green up, Red Down, Black neutral

World Markets (Power Numbers) Ave score 54
DJIA 47, Canada 74 Latin Amer 73 Mexico 50 Brazil 65
Europe 43 UK 47 Germany 62 Spain 56  Russia 64
China 58 Japan 50  Korea 25 Singapore 39 Taiwan 48 India 61 Australia 61
Emer Mkts 66 Total World market Index 47



Commodities (Power Numbers)
Oil 66 Nat Gas 30, Gasoline 92
Gold 83 Copper 38 Silver 81, Platinum 51
Grains 29 DBC 79


Currencies (Power Numbers)
USD 38  Aussie 92 Euro 67 , Brit Pd 65, Yuan 56, Yen 64

US Industry Groups (relative strength) Ave Score  51
3 up, 31 Neutral, 1 Downtrend  Score -+2

Homebuilders (XHB) 44,  Real Estate (IYR) 50, Finance (XLF) 42 Regional Banks (IAT) 47 Insurance (IAK) 44 , Broker/Dealers ( IAI) 47, Retail (XRT) 52  Consumer Disc (XLY) 51, Telecom (IYZ) 42, Consumer Staple (XLP) 57, Health (XLV) 53, Pharma (IHE) 49, Biotech (PBE ) 51, Transports (IYT) 43 Aerospace (ITA) 44, Shipping (SEA) 41, Airlines ($XAL) 39, ,Utilities (XLU) 59 , Metals and Mining( XME) 58, Copper (COPX) 53, Nat Gas Production (FCG ) 61 Oil Expl and Prod (IEO) 57 Oil Service (OIH) 57,  Coal (KOL) 54,  Energy (XLE) 61, Gold Miners (GDX) 64 Steel  (SLX) 46, Basic Mat (XLB) 46, Timber (Wood) 61AgriBusiness (MOO) 49, Tech (XLK) 47, Semiconductors (SMH) 57, Software (SWH) 57 Networking (PXQ) 58, Internet (FDN) 52



Bonds (Relative Strength)
 (0 up, 0 down, 9 neutral) Score 0

MUB (Natl Muni) 55 NCA(Ca Muni) 53 
BND (Total Bond Index) 51 BWX (International Treas Bonds) 58, PCY (Emerg Mkt Debt) 52 TLT (20+ US Treasuries) 50, IEF ( 10 yr Treasuries) 49, PFF (US preferred) 52, HYG (High Yield) 52

The storm is approaching and the market is lurching up and down in the high waves. This type of violent swings is symptomatic of a top. The players are getting whipped sawed and too much more of this will send them to the side lines. The shorts cannot be sure of any sell off here. Jobs numbers tomorrow.

Mikey




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