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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, February 28, 2012

Dollar at a critical support area... A bottom or a breakdown? / Stocks and commodities a breakout or a top??

News Highlights


The DJ Utilities and Transports are clearly underperformimg and the NASDAQ A/D has been down 5 of the last 6 days. The NASDAQ is being carried by big names but overall strength is fading. The DJI closed above the magic number 13000 with a whopping 99 net advances.  Oil was down 2.01 and gasoline dropped .09.Gold was up 13.50 and Silver was +1.63 both continued their uptrends. The bond market which had been selling off has stabilized just above 3%.

The fear factor in the market now is zilch and put premium is near yearly lows. The public is buying now 1.23 to 1 on mutial funds.  The ace in the whole is that the central bank is selling Dollars for Euros and the risk on trade is holding this thing up.  The question is are they done with this phase of dollar selling or do they want higher prices on commodities and at the pump?

The dollar closed just above its 200 day average today at 78.19.  This level is where the dollar broke out in Sept 2011. It is a critical area and should be support for now. It appears to me that the dollar is forming a very large head and shoulder bottom. The left shoulder being Oct 2010 to March 2011. The head being March to Sept 2011.  The right shoulder being Sept 2011 to the present. The dollar is sitting right on the neckline at 78.00. This  is the pivot point for the last breakout. The dollar index at 78.00 is at a very key area. If the dollar closes below 78.00 it should be considered an intermediate term downtrend.  If the dollar stays above 78 it would still be in an intermediate term uptrend. The Central banks have some critical decisions in here now and I am sure that this was the topic of discussion at the G20 meeting.

It makes sense to me that the Fed would hold onto the dollar at this level and cool off the oil and commodites markets and support the dollar. That would also put pressure on stocks Gold, Oil and the commodities markets. That combined with the extreme over bought condition of all of my indicators leads me to believe that this is some kind of a top here for stocks, oil and commodities. Of course, what makes sense to me means nothing, as always the trends call the tune.

In the event that the dollar breaks this support the opposite happens. Gold, Oil and Stocks blast off.  The key level to watch is 78.00.  The intermediate trend is still up for the dollar for now but the 78.00 is the area to watch.

Mikey

Key Indicators

Current trading range: 12500 -13027 DJI Close 13005
MACD Crosses: Negative cross =consolidation/correction Positive cross=uptrend
Short term (50 hour) Up (53 Hr) ...signal 2-16 12850 
MACD  Hourly (+12.43)
Current trend (50 day) Up (61 days)...signal 12-2-11 12019
MACD Daily (+127.26),Negative cross 2-13
Intermediate trend (50 week) Up (13 weeks)...signal 12-19-11 12294
MACD Weekly (+330.02 ), Positive cross 10-24-11 
Long term trend (50 month) Up (16 months)...signal 12/1/10 11577
MACD Monthly (+506.66) Positive Cross 9-1-09
IBD Current trend 12-20 Up  (48 days) Market in confirmed uptrend 12103
Volume(Millions) NYSE 751 NASDAQ 1756
Advance/Decline NYSE +99 NASDAQ -127 Mikey A/D line 49754
New Highs NYSE 174 NASDAQ 85 New Lows NYSE 8 NASDAQ 15
Overbought/Oversold (+100 overbought/-100 oversold)
Mikey5 +26 Neutral, Mikey10 +35 Neutral, Mikey20 +97 Neutral, Mikey50 +229 OB
% Stocks above 200 day ave 78% (above 50% uptrend)
Trader Psychology
Put/Call day .80, 10 day .81,  Put Premium .63 10 day .62,  
Bull/Bear Ratio 1.92 Bulls 51.1%, Bears 26.6%
Mutial Funds Buy/Redeem ratio 1.23
VIX 17.96 VXZ 55.67 Mikey Fear 88 (80 Low 20 High) 

Averages (uptrend 20>50)
20 hour 12990 Rising/ Price above
50 hour 12969 Rising/Price above
20 day 12873 Rising/Price above
50 day 12579 Rising/ Price above
20 week 12327 Rising/ Price above
50 week 12099 Rising/ Price above
20 month 11786 Rising/Price above
50 month 10784 Flat/Price above

Closing Prices

US Stocks
DJIA 13005.12 +23.61  S/P 500 1372.18 +4.59  NYSE Comp 8171.55 +27.99
NASDAQ  2986.76 +20.60 DJT 5165.19 -5.89 DJU 451.09 -1.69
US Debt Markets
US Gov rates: 6 mo .1420%  2 yr .2931% 5 Yr .8477% 10 yr 1.94 30 yr 3.07
Ave Mtg rates : 30 Yr 3.85% 30 Yr Rifi 3.93 % 15 Yr 3.15% 5/1 ARM 2.81
IEF (US 7-10 yr) 105.54 +.05 TLT (20 yr) 118.14 -.40
MUB (NatlMuni) 110.45 +.20  Cal Muni (NCA)10.15 uc
BND Total Bond Index 63.98 -.01
Commodities
CRB Commodities Index 323.12 -1.97
Gold 1788.40 +13.50 Silver 37.14 +1.63  Copper 3.91 +.04 Platinum 1723.50 +9.20 Oil 106.55 -2.01 RBOB 3.03 -.09  Nat Gas 2.52 -.08
US Dollar Index and World Currencies
Euro 1.3405 +.0065 Pound 1.5765 +.0078 Swiss Franc 1.1023 +.0052
Yen  1.2225 +.0008 Aussie 1.0794 +.0016 Canadian Dollar ..9991 +.0038
Dollar Index 78.18 -.24
World Debt markets
BWX (Intl Treas) 60.65 +.15  PCY (Emerg debt) 28.02 +.05 IBND (Intl Corp)33.79 +.25

All Markets Current Trends 

US SECTORS

(Green up Red down White Neutral)

NASDAQ
DJ Trans
DJ Util
Long Bonds
Energy
Tech
Healthcare
Materials
Retail
Housing
Consumer Discrestionary
Consumer Staples
Airline
Metals and Mining
Financial

World debt markets
US Bonds: 2-3 current trend neutral
US Natl Muni Markets:: 2-23 current trend neutral  

Intl Treas Bonds 1-26 current trend up
Intl Corp Bonds 1-26 current trend up
Emerging Markets Debt: 1-26 current trend up
US High Yield 12-12 current trend up
US Preferred Stocks 11-30 current trend up
Currencies markets
US Dollar Index 1-26 current trend down
Aussie Dollar 1-10 current trend up
Euro 1-26 current trend up
Brit Pd 1-26 current trend upl
Swiss Franc: 1-27 current trend up
Jap Yen 1-27 current trend up
Canadian Dollar 1-18 current trend upl
Mexican Peso 1-18 current trend upl
Brazilian Real 12-12 current trend up
Indian Rupe 12-12 current trend up

Commodity index
(Broad based) 1-19  current trend up
Metals
Gold: .1-26 current trend up
Silver: 1-21 current trend up
Copper 1-17 current trend up
Platinum 1-18 current trend up
Palladium 1-17 current trend up
Agg, Fiber, Wood
Grains 1-24   Current trend up
Cotton 1-17 current trend upl
Livestock 1-24 current trend up
Coffee 2-7 current trend neutral
Sugar 1-18 Current trend up
Lumber 2-3 current trend up
Energy
Oil  2-14 Current trend up
Heating Oil 1-3 Current trend up
Gasoline 12-21 current trend up
Natural Gas 7-28 current trend down

World Stock markets
US Stocks: 12-14 current trend up
Europe 1-18 current trend up
China: 1-17 current trend upl
Brazil 1-17 current trend up
Japan 1-18 current trend up
India 1-17 current trend up
Russia 1-18  current trend upl
India 1-17 current trend up
Total world markets 1-17 current trend up

Intermediate Term Trends
Dollar:Up
US Bonds: Up
Emerging Markets: Up 
Total World Stocks: UP
Emerging Debt: Up
World Bonds: Neutral
Oil: Up
Gold: Up
Silver: Up
Commodities: Up
China: Up
Brazil: Up
India: Up
Europe: Up
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