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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

Wednesday, March 16, 2011

Wanna buy a Bond?

DJIA 11613.30 -242.13 SPX 1256.88 -24.99 NASDAQ 2616.82 -50.51
Russell 2000 781.90 -9.43 DJT 4950 -69.74 DJU 397.22 -7.18 VIX 29.40
US Gov rates: 6 mo .1424   2 yr .5564% 10 yr 3.19 -.12 30 yr 4.36 -.08
IEF(US10 yr) 94.81 +.80 TLT (US LT) 93.93 +1.05 MUB (LT Natl Muni)100.39 +.36
BND (Total Bond Mkt)80.84 +.38  HYG (High Yield)89.78 -.56
Gold 1396.10 Silver 34.47 +.36 Copper 4.19 +.05 Platinum 1700.50 -5.10
Oil 97.98 RBOB 2.83 +.03 Nat Gas  3.95 +.01
Aussie .9837 -.0086 EURO 1.3832 -.0109 Pound 1.5926-.0055
USD Index 76.98 +.13 DBC 28.86 +.17
Days to option expiration: 3
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) 42
Put/Call Ratio(.6 OB 1.2 OS) 1.20 10 day average .89
Ratio Put Premiums to Call Premium (..34 to 2.5)  .86     10 day ave .75
Mutial Fund  Purchase/Redemptions ( 1.5 to .66)  1.15   
Williams %R 12 day -91.96 weekly -89.01
Bulls 52.2   Bears 22.3 Bull/Bear ratio 2.34 Bullish
Mikey Thrust indicator: Daily 1 Weekly 1 (1 low, 10 max) 2, -0
DJIA MACD -42.50 (below 0 line) Falling/Negative Cross  2-22
NYSE New Highs 37 (12/7 429)  New Lows 46 (more new lows than highs)
NASDAQ New Highs 37 (12-7 352) New Lows 74 (new lows / new highs )
NYSE Advance-Decline -1620 NASDAQ Advance-Decline -1169
Mikey A/D line NYSE (3/3 25358)+18673 NASDAQ (2-18 10095) +2384
NYSE % above 200 day ave  65%

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 11898 Falling/Price below
20 day 12115 Falling/Price below
50 day 12010  Falling/Price below
90 day 11718  Rising/Price below
200 day 11049  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  36
DJIA 31 Canada 50 Latin Amer 38 Mexico 38 Brazil 57
Europe 19 UK 20 Germany 17 Spain 50 Russia 43
China 53 Japan 8 Korea 35
Singapore 22 Taiwan 38 India 52 Australia 38
Emer Mkts 60 Total World market Index 17

Commodities (Power Numbers)
Oil 44 Nat Gas 46, Gasoline 53
Gold 60 Copper 32 Silver 59, Platinum 47
Grains 35 DBC 63

Currencies (Power Numbers)
USD 46 Aussie 32 Euro 62 , Brit Pd 39 Yuan 34 Yen 66 (this is a joke) 

US Industry Groups (relative strength) Ave Score 37
0 up, 10 Neutral, 25 Downtrend Score -25
Homebuilders (XHB) 45, Real Estate (IYR) 42, Finance (XLF) 36 Regional Banks (IAT) 37 Insurance (IAK) 34 , Broker/Dealers ( IAI) 30, Retail (XRT) 46 Consumer Disc (XLY) 38  Telecom (IYZ) 35 Consumer Staple (XLP) 36  Health (XLV) 36, Pharma (IHE) 36, Biotech (PBE ) 36, Transports (IYT) 42 Aerospace (ITA) 37, Shipping (SEA) 29, Airlines ($XAL) 38, ,Utilities (XLU) 35 , Metals and Mining( XME) 43, Copper (CO34PX) 36, Nat Gas Production (FCG ) 50 Oil Expl and Prod (IEO) 45 Oil Service (OIH) 40, Coal (KOL) 50, Energy (XLE) 43, Gold Miners (GDX) 38 Steel (SLX) 37 Basic Mat (XLB) 37 Timber (Wood) 37 A46griBusiness (MOO) 31, Tech (XLK) 29, Semiconductors (SMH) 31, Software (SWH) 31 Networking (PXQ) 37 Internet (FDN) 35

Bonds (Relative Strength)
(1 up,36  down, 8 neutral) Score 1

MUB (Natl Muni) 56 NCA(Ca Muni) 42 BND (Total Bond Index) 68 BWX (International Treas Bonds) 64, PCY (Emerg Mkt Debt) 40 TLT (20+ US Treasuries) 64, IEF ( 10 yr Treasuries) 66, PFF (US preferred) 46, HYG (High Yield) 27
Notes: Money leaving low quality debt and moving into US Treasuries

Yes, the bond market is entering a uptrend again. Just at the time that the Fed is not buying bonds and the inflation numbers start to show inflation is actually picking up. The reason for following trends is that to make sense out the the economic gibberish will always put you in the wrong place. If given the choice follow the trend.

Stocks have hit the 90 day average a point that will usually be short term support. The options expire in 2 days and the Put/call ratio is a healthy 1.20 so I would highly doubt that the puts would be rewarded with any further sell off from here. The fact is that the game has changed and a rally would be shortable. Watch the industry groups and when they turn green that would be a shorting opportunity.

In my opinion, this sell off is not about Japan. It is about a change in direction. A direction that will let the air out of commodities and watch the dollar strengthen and the world economy sink. The world economy is clearly slowing and so is the economy in the US.  I would expect a solution to Japan in the near term and that would give them an excuse to run the shorts again. I think there are too many shorts on the train now. A solution in Japan, ie things were not as bad as we thought and it is going to be OK will be the next turn in the news. This sell off is the primary sell off and the break in the trend but like I said yesterday nothing in the markets go in a straight line.
Mikey
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