Posting Times

Posts will be between 8:30 PM to 10:00 PM PST
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, October 1, 2012

This is a top....Why? Read this blog

The market climbs a wall of worry.   It has always been that way and it still is today.  I will not detail the reasons why it acts this way but if you can accept that then read on. The  Fed is now on its third QE.  QE 1 and QE2 both came after market selloffs and in both cases there was enough worry to build that wall.

The market then bottomed and rallied to new highs. We are now at QE3 and the wall of worry is gone. All you have to do is look at the indicators and you see that the shorts and sellers have gone away. The problems in the economy are still present but is is not creating enough of a worry to coax the sellers into the market.  This QE came at a market top and not a bottom.  IT GIVES THE IMPRESSION THAT THE Fed WILL NOT ALLOW A SELLOFF.  That fact breaks down the wall of worry and eliminates the perception of risk.

Markets will not top because they are overpriced or overvalued.  They top because the perception of risk is gone. The wall of worry is broken and the traders focus on the upside. They expect the downside to be minimal and contained. That is where the market is now. Buyers beware.  The downside risk is great in the market now and the perception of risk is not. This is where it tops. I would expect this top to be before the election because the perception of low risk is the greatest. 

The boy who cried wolf comes to mind when we are looking for a top or bottom. The boy knows the wolf is coming.He tells his story enough times that the idea of the wolf coming is not a fear.  There are those in the market that are "reality based" that warn many times that the fundamentals are bad and prices are overvalued. They say that risk is high and not to invest.  The public sees the same thing and stays away until the story makes no sense because price is persistently going higher.

The wolf shows up when the story no longer creates fear. The boy is discredited and at that moment the wolf can show up at anytime.  This is where we are today.  The wolf can show at any time. The market risk today is as great as it has been since Sept 2008 and the wolf is waiting to strike.

There comes a time when investors are tired of making nothing and capitulate because they see market prices going higher.  Those brokers that tell their clients to stay away are now seeing those clients walk to the other brokers that are willing to sell them anything.

Tops and bottoms come with the capitulation of the public and that is happening now.  Make money is the mantra not protect capital that was prevailant after the crash of 2008 and lasted until this year. The Wolf is howling. Even though the top is near I will not short until the trend turns negative.

If you know someone that is deep in the market email them this blog.

Mikey 

Trends:
Daily Uptrend  12822 on 7-20
Long Term UP/ Intermediate Term Up/ Daily Trend Up  /Short Term neutral
DJI Close 13515.11 + 77.98
Current trading range: 13423- 14200 
Step up trading range  14200 -new high
Step down support range 12980-13423
Key Indicators

Averages
50 Hour Ave: 13517 Price below
20 Day Ave: 13423 Price above
50 Day Ave: 13212 Price above
20 Week Ave: 13006 Price above
50 Week Ave: 12753 Price above
50 Month Ave 10904 Price above

Overbought/Oversold readings (Mikey reading) +100  to -100
5 day -10 N 10 day -20 N 20 day +76 N  50 day +93 N
MACD Readings
MACD Crosses: Negative cross = consolidation/correction Positive cross=uptrend
Short term (50 hour) ,Neut  (5 Hrs) signal 10-1
MACD Hourly +14.20
Daily trend (50 day) Up 55 days 7-17 12805
MACD Daily +99.72 Negative cross 9-26
Intermediate trend (50 week) Up (16 weeks).signal 6-1 12118
MACD Weekly (+238.47) Positive cross  7-30
Long term trend (50 month) Up (22 months)...signal 12/1/10 11577
MACD Monthly (+579.34) Positive Cross 9-1-09

IBD:Market in Confirmed Uptrend 7-26 12887

Volume Readings
Volume (Millions) NYSE 3407 NASDAQ 1718
Advance/Decline NYSE +710 NASDAQ +326
Mikey NYSE A/D line +64044 Mikey NASDAQ A/D line -12234
Trader Psychology
Put/Call day .72  10 day .73  Put Prem/Call Prem  .77 10 day .67
Bull/Bear Ratio 2.08 Bulls 51%, Bears 24.5% Mutial Funds Buy/Redeem ratio 1.17
VIX 16.32 VXZ 33.81 Trin  1.10 10 day ave 1.53 Mikey Fear  95 (80 Low 20 High)
New Highs NYSE 251 NASDAQ 135 New Lows NYSE 14 NASDAQ 30
% Stocks above 200 day ave 68% (above 50% uptrend)

Closing Prices

US Stocks
DJIA 13515.98 +77.98 S/P 500 1444.49 +3.82 NASDAQ 3113.52 -2.70
DJT 4899.73 +7.11 DJU 474.11  -1.64
US Debt Markets
US Gov rates: 6 mo .1344% 2 yr .2343% 5 Yr .6250% 10 yr 1.63% 30 yr 2.82
Ave Mtg rates : 30 Yr 3.43% 15 Yr 2.85% 5/1 ARM 2.95
IEF (US 7-10 yr) 108.52 +.06  TLT (20 yr) 124.21 +.25 High Yield 91.70 -.11
MUB(NatMuni) 111.67 -.05 Cal Muni(NCA)10.67 +.04
BND Total Bnd Ind 85.04 +.06
Commodities
CRB Commodities Index 310.80 +1.50
Gold  1780.50 +9.40 Silver 34.95 +.38   Copper 3.78 +.02 Platinum 1685.80 +16.50
Oil 92.48 +.28  RBOB 2.91 Nat Gas 3.48 +.16

US Dollar Index and World Currencies
Euro 1.2505 +.0035  Pound 1.5966 -.0011 Swiss Franc 1.0493 +.0024
Yen ..012587 +.00007Aussie 1.0369 -.0070 Canadian Dollar 1.0117 +.0047
Dollar Index 79.90 -.12

All Market Trends:

Commodities
Gold:    Long Term/ Intermediate Term  Daily Trend// Short term
Silver: Long Term / Intermediate Term/ Daily Trend / Short term
Copper:Long Term/ Intermediate Term/ Daily Trend / Short term
Oil:       Long Term/ Intermediate Term/ Daily Trend / Short term
Gasoline Long Term/ Intermediate Term/ Daily Trend/  Short term
Nat Gas:Long Term/ Intermediate Term/ Daily Trend / Short term
CRB        Long Term/ Intermediate Term/ Daily Trend / Short term
Bond Markets
US Bonds LT Long Term/ Intermediate Term/ Daily Trend/ / Short term
Intl  Treas       Long Term/ Intermediate Term/ Daily Trend /Short term
Intl Corp          Long Term/ Intermediate Term/ Daily Trend/ / Short term
US Muni        Long Term/ Intermediate Term/ Daily Trend   Short Trend/ /
High Yield     Long Term/ Intermediate Term/ Daily Trend/ / Short term
Currencies
Aussie DollarLong Term/ Intermediate Term/ Daily Trend/ / Short term
Brit PD         Long Term/ Intermediate Term/ Daily Trend / Short term
Euro             Long Term/ Intermediate Term/ Daily Trend Short term
Yen               Long Term/ Intermediate Term/Daily Trend/  Short term
Swiss            Long Term/ Intermediate Term/ Daily Trend / Short term
Can Dollar Long Term/ Intermediate Term Daily Trend/ Short term
US Dollar   Long Term/ Intermediate Term/ Daily Trend / Short term

Stocks
US Long Term/ Intermediate Term/ Daily Trend/  Short term
Europe Long Term/ Intermediate Term/ Daily Trend/ Short term Germany Long Term/ Intermediate Term/ Daily Trend/ Short term
China Long Term/ Intermediate Term Daily Trend/ / Short term
Brazil Long Term/ Intermediate Term/ Daily Trend/ Short term India   Long Term/ Intermediate Term/ Daily Trend/ Short term
Emerg Mkts Long Term/ Intermediate Term/ Daily Trend/Short term
Japan Long Term/ Intermediate Term/ Daily Trend/ Short term
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