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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

Friday, October 19, 2012

DJI closes back at drop dead line Intermediate uptrend long in the tooth

     
    The DJI closed down 205.43 back to the 10-12 low and also just under the 50 day average and the breakout area of 13300 of 9-12. That is about as close as you can come to a sell signal without giving one. IBD gave its sell signal on 10-13 at 13344 and stocks rallied to 13584.  They did not give the all clear signal and we closed at 13343 or 1 point below that day today. 

    It was a surprise to me that the DJI did not break on 10-14 right after they gave the sell. It would also surprise me if we did not close down by a big number Monday.  The truth is that the signal has still not been given but selling today was probably the right thing to do. 

    The drop dead number is still 13300 but I have seen many stocks already reverse. AAPL,CMG and GOOG may be a foreteller of things to come. I see many IBD darlings heading south in a hurry  LULU broke Friday.  More and more high flyers are coming back to earth.  Something different is definitely happening now.

     The QE 3 by the Fed is so far a con game to give false support and keep sellers from swamping the market. Actions speak louder than words and the dollar has rallied from the time they signaled QE 3.

    This uptrend is now 16 weeks old which is about right for intermediate term moves so a correction may be coming. This is the 3 rd time back to the 50 day average in this uptrend and the second in the last week. The 20 day average was broken in late August and again on 10-10. This is the third break of the 20 day average since 8-24. This has created a negative wiggle and a negative divergence in the daily MACD.

    The  DJI 50 day average has held since this uptrend began 16 weeks ago but the NASDAQ broke 2 weeks ago and is underperforming the DJI.  This normally is the case as the press is focused on the DJI averages and is always the last to go.  The Generals are the last to go in an intermediate term trend as the fund managers crowd into the safety of the big names.

    There has not been a new high since the QE 3 announcement by the Fed on 9-14. So the DJI has not made a new high for the last 5 weeks after the Fed blew smoke up our skirts. Of course, the Fed can change their omniscient minds at ant time but this looks like an exit strategy to me.

    In summary, honor your stops if you still have long positions. They should be 7% below your entry point.  Monitor the market  trends section at the bottom of this blog and stay on the right side of the daily and intermediate term trends.

    Mikey 
     
    DJI Summary
    Daily Uptrend 12822 on 7-20 65 days
    Intermediate uptrend  at 12400 on 6-7 19 weeks old
    Last high 9-14 13653  Last Low  10-12 13296
    20 day average pullbacks since uptrend began  6
    50 day averge pullbacks since uptrend  3
    IBD Market in correction 10-13 13344
     

    Long Term UP/ Intermediate Term Up/ Daily Trend neutral/Short Term up
    DJI Close 13343.51 -205.43
    Current trading range: 13295- 14200
    Step up trading range 14200 -new high
    Step down support range 12780-13295

    Average watch
    50 Hour Ave: 13443 Price below
    20 Day Ave: 13485 Price below
    50 Day Ave: 13356 Price below     (do not be long if this line is red)
    20 Week Ave: 13126 Price above
    50 Week Ave: 12808 Price above
    50 Month Ave 10942 Price above

    Overbought/Oversold Oscillator(Mikey reading) +150  to -150
    Trades should be taken at 150 readings in an established trend of at least 4 weeks
    3 day -28 N  7 day +60 N 20 day +0  N  50 day +78 N

    MACD Readings
    MACD Crosses: Negative cross = consolidation/correction Positive cross=uptrend
    Short term (50 hour) , down  (5 Hrs) signal 10-19
    MACD Hourly -32.52
    Daily trend (50 day) Up 65 days 7-17 12805
    MACD Daily + 46.85 Negative cross 9-26
    Intermediate trend (50 week) Up (19 weeks).signal 6-7 12400
    MACD Weekly (+236.36) Positive cross  7-30
    Long term trend (50 month) Up (22 months)...signal 12/1/10 11577
    MACD Monthly (+595.02) Positive Cross 9-1-09

    Volume Readings
    Volume (Millions) NYSE 3812 NASDAQ 2184
    Advance/Decline NYSE  -1760  NASDAQ -1508
    Mikey NYSE A/D line +65026 Mikey NASDAQ A/D line -14728
    Trader Psychology
    Put/Call day 1.03 10 day .84 Put Prem/Call Prem  .98 10 day .88
    Bull/Bear Ratio 1.60 Bulls 42.6 %, Bears 26.6%
    Mutial Funds Buy/Redeem ratio 1.15
    VIX 17.80 VXZ 31.86 Trin  2.48 10 day ave 1.20
    Mikey Fear  92
    New Highs NYSE 128 NASDAQ 48 New Lows NYSE 33 NASDAQ 84
    % Stocks above 200 day ave 65% (above 50% uptrend)

    Closing Prices

    US Stocks
    DJIA 13343.51 -205.43 S/P 500 1433.19 -24.15 NASDAQ 3005.62 -67.25
    DJT 5082. 15 -74.38 DJU 483.76 -3.60
    US Debt Markets
    US Gov rates: 6 mo .1520% 2 yr .3023% 5 yr .7863% 10 yr 1.77% 30 yr  2.93
    IEF (US 7-10 yr) 107.27 +.44 TLT (20 yr)121.86 +1-2.70 .75 High Yield 92.96 -.47
    MUB(NatMuni) 111.79+.12 Cal Muni(NCA)10.55 -.13
    BND Total Bnd Ind 84.68 +.13
    Commodities 
    CRB Commodities Index 306.05 -2.70 
    Gold  1724.00 -20.70 Silver 32.09 -.77 Copper 3.63 -.10 Platinum 1615.50 -28.20
    Oil90.05 -2.05 RBOB2.69 -.04 Nat Gas 3.61 +.04
    US Dollar Index and World Currencies
    Euro 1.2951 -.0047 Pound 1.5836 -.0045 Swiss Franc 1.0599 -.0049
    Yen .012377 -000008 Aussie 1.0348 -.0036 Canadian Dollar 1.0012 -.0085
    Dollar Index 79.69 +.26
    All Market Trends:

    Commodities
    Gold:  LongTerm/ 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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