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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

Monday, March 21, 2011

This rally is doomed along with the current Fed policy

DJIA 12036.53 +178.01 SPX 1298.38 +19.18 NASDAQ 2692.09 +178.01
Russell 2000 813.02 +8.31 DJT 5166.83 +10.88  DJU 406.23 +6.05 VIX 20.61  
US Gov rates: 6 mo .1373%  2 yr .6412% 10 yr 3.33 +.06 30 yr 4.45 +.04
IEF(US10 yr) 93.97 -.49 TLT (US LT)92.99 -.47 MUB (LT Natl Muni)100.23 uc
BND (Total Bond Mkt)80.48 -.23 HYG (High Yield)91.74 +.56
Gold 1426.40 +10.30   Silver 36.00 +.94 Copper 4.29 -.05 Platinum 1747.90 +24.50
Oil 102.33 +2.16  RBOB 3.00 +.06 Nat Gas  4.15 -.01
Aussie 1.0074 +.0076 EURO 1.4171 +.0057 Pound 1.6212 +.0086
USD Index 75.66 -.31  DBC 29.86 +.14
Days to option expiration: 20

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) 78
Put/Call Ratio(.6 OB 1.2 OS) .70 10 day average .86
Ratio Put Premiums to Call Premium (..34 to 2.5)  .88     10 day ave .82
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -32.96  weekly -42.58
Bulls 52.2   Bears 22.3 Bull/Bear ratio 2.34 Bullish
Mikey Thrust indicator: Daily 7 Weekly 6 (1 low, 10 max)13, +1
DJIA MACD -51.43 (below 0 line) Rising/Negative Cross  2-22
NYSE New Highs 129(12/7 429)  New Lows 11
NASDAQ New Highs 88(12-7 352) New Lows 28
NYSE Advance-Decline +1911 NASDAQ Advance-Decline +1474
Mikey A/D line NYSE (3/3 25358)+23284 NASDAQ (2-18 10095) +5369
NYSE % above 200 day ave  73%

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 11827 Rising/Price above
20 day 12048 Falling/Price below
50 day 12015  Rising/Price above
90 day 11734 Rising/Price above
200 day 11076  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  42
DJIA 40 Canada 53 Latin Amer 36 Mexico 41 Brazil 50
Europe 31 UK 29 Germany 29 Spain 52 Russia 47
China 54 Japan 29 Korea 49
Singapore 34 Taiwan 44 India 53  Australia 43
Emer Mkts 61 Total World market Index 31

Commodities (Power Numbers)
Oil 58 Nat Gas 58, Gasoline 54
Gold 69 Copper 30 Silver 66, Platinum 50
Grains 36DBC 63

Currencies (Power Numbers)
USD 39 Aussie 39 Euro 70 , Brit Pd 60 Yuan 44 Yen 63  

US Industry Groups (relative strength) Ave Score 49
(1 up, 34 Neutral, 0 Downtrend)Score +1

Homebuilders (XHB) 53, Real Estate (IYR) 53, Finance (XLF) 47 Regional Banks (IAT) 46 Insurance (IAK) 48 , Broker/Dealers ( IAI) 45, Retail (XRT) 52 Consumer Disc (XLY) 46  Telecom (IYZ) 44
Consumer Staple (XLP)50 Health (XLV) 48, Pharma (IHE) 48, Biotech (PBE ) 46, Transports (IYT) 55 Aerospace (ITA) 45, Shipping (SEA) 47, Airlines ($XAL) 45, ,Utilities (XLU) 42, Metals and Mining( XME) 47, Copper (COPX) 48, Nat Gas Production (FCG ) 59, Oil Expl and Prod (IEO) 61 Oil Service (OIH) 55, Coal (KOL) 59, Energy (XLE) 58, Gold Miners (GDX) 51 Steel (SLX) 50 Basic Mat (XLB) 50 Timber (Wood) 54 AgriBusiness (MOO) 49, Tech (XLK) 42, Semiconductors (SMH) 46, Software (SWH) 46 Networking (PXQ) 44 Internet (FDN) 46

Bonds (Relative Strength)
(4 up,  down, 5 neutral) Score 4

MUB (Natl Muni) 54 NCA(Ca Muni) 47 BND (Total Bond Index) 57 BWX (International Treas Bonds) 68, PCY (Emerg Mkt Debt) 55 TLT (20+ US Treasuries) 57, IEF ( 10 yr Treasuries) 56, PFF (US preferred) 54, HYG (High Yield) 54

The Fed looks invincible. The risk trade that essentially says that when the dollar falls all is well, is in its dying troughs.  The dollar falls as conditions improve. The only problem is that food and oil prices are pissing the public off and causing world unrest. The big problems the world faces is commodity inflation.  That by itself is killing the economies of the world and many countries are raising reserves and interest rates weekly to stop it. The other problem is that employment and housing prices are still in the tank in the US. To put it mildly this policy by the Fed is now non productive. It is destroying world economic growth. They need to go in a different direction. I believe that this last sell off is the beginning of that change in direction.

Technically we have rallied back to the breakdown of 12000. Today, the market rallied on lower volume, continuing a pattern of low volume rallies and higher volume sell offs. This show a lack of participation by the mutual funds and hedge funds. Now that the puts and shorts have been punished for their sells last week I think the stage is set for a move to 11200.

Mikey
Mikey
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