Posting Times

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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

Saturday, January 26, 2013

Marching higher...everyday or bringing the sheep

Bringing in the sheep, bringing in the sheep, we will be all rejoicing bringing in the sheep.  Market tops and bottoms have the same thing in common. The end game that usually last from 6 weeks to 10 weeks is persistent.  The pullbacks and sell offs go away and the market grinds higher in a top and sinks lower in a bottom. It gets the investor conformable with the direction.  The news turns all one way and the price confirms that direction everyday.  It does it day after day not big moves but always the same direction.  The market becomes very overbought but continues with no pullbacks.  It forces all the traders to the same side and that is what I think is going on here. 

The last part of the move will typically have a spike that puts an exclamation point on the whole move.  In many cases, it will happen at what appears to be a breakout of an important new high.  That spike forces total capitulation from the shorts and sets up the longs to hold their positions and buy the pullback because they are afraid of missing out on the next move. The shorts cover every sell off and the longs buy the pullback.  This sets up the decline. The move ends when the breakout new high reverses and closes below the breakout.

The DJI has done what I thought was impossible, that is it has returned to its 2007 all time highs.  The fundamentals do not support it or do they?  I don't know but if you were stubborn and refused to buy the trend you missed out on the whole move.  I think that is the case for most thinking investors. The moral is DON'T THINK follow the trend. If you want to think play chess.

 Stocks are a game and that game usually defeats everyone who plays it. The worst thing I ever did was to think that I knew something and then acted on it.  I have done that plenty of times and have regretted it every time. I may be just an idiot but I know I have lots of company.  This game never changes and believe me having a blank mind and the willingness to accept what is happening and going with the flow is key to your success.

Use this blog to stay on track, follow the trends and don't argue with them.  Do not assume that you know what is going to happen. Your going to get whipsawed from time to time but you will bat over 500 and that will make you money.  I would love to be short right in here but I thought the the market was going to double bottom after the first rally to 10000 in 2009.  I thought that the market had topped in August 2011 when it broke 12000.  I also thought that the market had topped when the DJI broke 13000 in November of last year.

I could not believe that the Fed and the Treasury would be able to run the economy that was unemployed and had just went through a real estate and banking disaster. Silly me, because they pulled it off.  The fact is that the Central bank is a trader that allows disasters and then puts the pieces back together. They allow mind boggling runs and crashes in the economy. The average guy, meaning me, can't believe that they can do what they do.

The point is, do not try to figure out what they are doing because they are the masters of illusion,  just follow the trends. This will keep you out of trouble and make you money.  Following trends turns stock investing into letters and numbers.  The only thing that matters is gain. The ego of I know what is going to happen is out of the game. It is a systematic approach that does not invest into the idea of being right or wrong.

This blog is my diary of the US stock and commodities markets. I monitor and post trend changes that aide me in my trades.  I post these changes mostly on a daily basis for all to see. I do have opinions and will post those as well.  You have to make your own decisions and feel free to agree or disagree with anything that I post. What I think has been molded by watching the markets for the past 35 years. My posts are biased by who I am and what I have seen. Please take that into account when you are reading this blog.

The most logical area of investment now is the Gold stock group because of all the turmoil in the financial markets.  The trend is down and coming unglued. The most logical short would be Europe but guess what the trend is all up and moving higher. If you invest because you have a belief in something be prepared to go through the pain before it works. If you believe in Gold invest when the trend is on your side not when price is falling.  Investing can be a humbling experience.  My advice is to stay on the right side of the trend in those areas you believe in.  Wait until price confirms your belief.  This blog will help you do that.

The gold stocks have broken and they usually lead Gold. I would think that Gold and Silver are in for a decent move down.  A close below 30.90 would flip the intermediate term down for Silver. Gold closed below its intermediate term trend today and a lower close would confirm the downside. I know that it makes no sense for Gold to drop now.  The dollar is still on its trading lows but this is exactly what I am talking about. You have 2 choices stick to your beliefs and try to make sense out of it or go with the trend. Going with the trend makes the most sense to me.


Mikey

     For Friday 1-26
    DJI Trend Summary m
    Long Term UP/ Intermediate UP/ Daily UP/Short Term UP
    DJI Close 13895.98 +70.65

    Hourly Uptrend: 13118 1-2 (84 hrs)
    Daily Uptrend: 13412 on 1-2 (12 days)
    Intermediate Uptrend: at 13412 on 1-2(12 days)
    Long Term Uptrend 11315 on 11-1-10  2 years + 2 months
    IBD Market in confirmed uptrend 13104 12-31
    Current Trading range   13043 - 13895
    Step Down trading Range 12471- 13043
    Resistence: 14196 From Oct 2007
    Support 1 13600
    Support 2 13360
    Support 3 12880
    Average watch
    50 Hour Ave: 13690 Price above
    20 Day Ave: 13472 Price above
    50 Day Ave: 13199 Price above   (no long positions if this line is red)
    20 Week Ave: 13270 Price above
    50 Week Ave: 13063 Price above
    200 Week Ave 11380 Price above
    Last high 1-24 13879  Last Low 11-15 12471 
    Group Trend changes of note:
    Utilities: Intermediate from down to up
    Gold:  Intermediate from up to down
    Nat Gas Stock Group (FCG): Intermediate Term up
    Muni Bonds: Daily from neutral to down
    Brokers Long term from Neutral to up
    MACD 
    Short term (50 hour) Uptrend( 107 Hours)
    MACD +59.80
    Daily trend (50 day) Uptrend 17 days 1-2
    MACD Daily +174.85 Positive cross 1-3
    Intermediate trend (50 week) Uptrend (17 days).signal 12-31 13104
    MACD Weekly (+96.71) Positive Cross 1-7
    Long term trend (50 week) Uptrend  (26 months)...signal 12/1/10 11577
    MACD Monthly (+571.10) Positive Cross 1/8/12.
     
    Volume Readings
    Volume (Millions) NYSE 3381  NASDAQ 1884
    Advance/Decline NYSE +730 NASDAQ +288
    Mikey NYSE A/D line +80623 new high  Mikey NASDAQ A/D line -10347
    Trader Psychology
    Put/Call day .73 10 day .76  Put Prem/Call Prem .95 10 day .83
    Mikey 108 (90 Low fear 30 High Fear)  VIX 12.89
    Bulls 53.2 Bears 22.3  Ratio 2.38
    New Highs NYSE 375  NASDAQ 207
    New Lows  NYSE 15 NASDAQ 12
     
    Closing Prices

    US Stocks
    DJIA 13895.98 +70.95 S/P 500 1502.91 +8.14 NASDAQ 3144.71 +19.33
    DJT 5870.05 +15.11   DJU 470.05 +2.78
    US Debt Markets
    US Gov rates: 6 mo .12% 2 yr 262% 5 yr .765 10 yr 1.85% 30 yr  3.03%
    Mortgage Rates 30 year 3.50% 15 Yr 2.84%
    IEF (US 7-10 yr) 106.30 -.73 TLT (US 20 yr) 117.94 -1.73 
    MUB(NatMuni) 111.91 -.46 Cal Muni(NCA) 10.51 -.08
    LQD (Investment Grade Corp) 120.11 -.53 High Yield 94.85 -.02
    Commodities 
    CRB Commodities Index 299.31 -1.29
    Gold  1656.60 -13.30 Silver 31.20 -.51
    Copper 3.65 -.02  Platinum 1694.90 +11.10
    Oil 95.88 -.07 RBOB 2.87 +.01 Nat Gas 3.44
    US Dollar Index
    Dollar Index 80.00 -.03
    US Dollar Long Term/ Intermediate Term/ Daily Trend/ Short term

    All Market Trends:
    Short term trading rules:
    Initiate long positions when Intermediate and Daily Trends are green AND the Short term turns green from yellow or red  The best signal occurs on the second green signal. The first will usually reverse to red then buy the second green
    Take profits 3-5 days after 20 day high
    Enter  sell stop below the 20 day low or at 7% loss
    Commodities
    Gold: (GLD)    LongTerm/ Intermediate Term  Daily Trend/ Short term
    Silver: (SLV)   Long Term / Intermediate Term/ Daily Trend / Short term
    Copper:(JCC) Long Term/ Intermediate Term/ Daily Trend / Short term
    Oil: (USO)       Long Term/ Intermediate Term/ Daily Trend / Short term
    Gasoline (UGA) Long Term/ Intermediate Term/ Daily Trend/  Short term
    Nat Gas:(UNG)Long Term/ Intermediate Term/ Daily Trend / Short term
    Commod (USCI) Long Term/ Intermediate Term/ Daily Trend / Short term
    Bond Markets
    US Bonds LT (TLT) Long Term/ Intermed Term/ Daily Trend/  Short term
    US Corp BBB (LQD)  Long Term/ IntermedTerm/ Daily Trend/ Short term 
    US Muni  (MUB)      Long Term IntermedTerm/ Daily Trend   Short Trend
    High Yield  (HYG)   Long Term/ IntermedTerm/ Daily Trend / Short term
    Utility stocks (XLU):Long Term/ IntermedTerm/ Daily Trend / Short term
    Stocks
    US ($DJI)     Long Term    / Intermediate Term/ Daily Trend/  Short term
    Europe(IEV) Long Term/ Intermediate Term/ Daily Trend/ Short term
    China (FXI)    Long Term/ Intermediate Term Daily Trend/  Short term
    Brazil EWZ)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    India  (PIN) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Emerg Mkt(EEM) Long Term/ Intermed Term/ Daily Trend/Short term
    Japan (EWJ)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    Stock Groups (updated 1-25)
    Utilities (XLU)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    Water (FIW) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Health (XLV) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Food/Bev (PBJ) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Home Build(XHB) Long Term/ Intermed Term/ Daily Trend/ Short term
    Retail (XRT) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Staples (XLP) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Transports (IYT) Long Term/ Intermediate Term/ Daily Trend/ Short
    Global Auto (CARZ)  Long Term/ Intermed term/ Daily Trend/ Short
    Shipping (SEA) Long Term/ Intermed Term/ Daily Trend/ Short term
    Aerospace ( ITA) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Energy (XLE)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    Oil Expl (IEO) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Nat Gas (FCG) Long Term/ Intermediate Term/ Daily Trend/ Short Term
    Finance (XLF)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    Brokers (IAI) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Insurance (IAK) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Reg Bank (IAT) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Mortgage (KME) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Tech (XLK)  Long Term/ Intermediate Term/ Daily Trend/ Short term
    Gold Miners (GDX) Long Term/ Intermed Term/ Daily Trend/ Short term
    Materials (XLB) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Reits (IYR) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Communication(IYZ) Long Term/ Intermed Term/ Daily Trend/ Short term
    Pharma (XPH) Long Term/ Intermediate Term/ Daily Trend/ Short term
    Biotech (BBH) Long Term/ Intermediate Term/ Daily Trend/ Short term 
    Selected Stocks (Updated 1/25)
    BRK.B Long Term/ Intermediate Term/ Daily Trend/ Short term
    AEM Long Term/ Intermediate Term/ Daily Trend/ Short term
    FCX  Long Term/ Intermediate Term/ Daily Trend/ Short term
    AAPLLong Term/ Intermediate Term/ Daily Trend / Short term
    AGU Long Term/ Intermediate Term/ Daily Trend/ Short term
    BIDU Long Term/ Intermediate Term/ Daily Trend/ Short term
    GOOG Long Term/ Intermediate Term/ Daily Trend/ Short term
    QCOM Long Term/ Intermediate Term/Daily Trend/ Short term
    CRUS Long Term/ Intermediate Term/Daily Trend/ Short term
    NOK  Long Term/Intermediate Term/Daily Trend Short term
    FB    Long Term/ Intermediate Term/ Daily Trend/ Short term
    MCD Long Term/ Intermediate Term/ Daily Trend / Short term
    CELG Long Term/ Intermediate Term/ Daily Trend/ Short term
    BIIB  Long Term/ Intermediate Term/ Daily Trend/ Short term
    BMY Long Term/ Intermediate Term/ Daily Trend/ Short term
    OPK  Long Term/ Intermediate Term/ Daily Trend/ Short term
    WMT Long Term/ Intermediate Term/ Daily Trend/ Short term
    GLW  Long Term/ Intermediate Term/ Daily Trend/ Short term
    AMZN Long Term/Intermediate Term/Daily Trend Short term
    FDX Long Term/ Intermediate Term/ Daily Trend/ Short term
    XOM Long Term/ Intermediate Term/ Daily Trend/ Short term
    HFC Long Term/ Intermediate Term/ Daily Trend/ Short term
    COP  Long Term/ Intermediate Term/ Daily Trend/ Short term
    COG Long Term/ Intermediate Term/ Daily Trend/ Short term
    SLB  Long Term/ Intermediate Term/ Daily Trend/ Short term
    LEN   Long term/ Intermediate Term/ Daily Trend/ Short term
    CAT Long Term/ Intermediate Term/ Daily Trend/Short term
    DAL Long Term/ Intermediate Term/ Daily Trend/ Short term
    JPM   Long Term/ Intermediate Term/ Daily Trend/ Short term
    AXP Long Term/ Intermediate Term/ Daily Trend/ Short term
    USB Long Term/ Intermediate Term/ Daily Trend/ Short term
    GS  Long Term/ Intermediate Term/ Daily Trend/ Short term
    IBM Long Term/ Intermediate Term/ Daily Trend/ Short term
    CRM Long Term/ Intermediate Term/ Daily Trend/ Short term
    BMYLong Term/ Intermediate Term/ Daily Trend/ Short term
    CI  Long Term/ Intermediate Term/ Daily Trend/ Short term
    DVA Long Term/ Intermediate Term/ Daily Trend/ Short term
    WAGLong Term/ Intermediate Term/ Daily Trend/ Short term
    CVS Long Term/ Intermediate Term/ Daily Trend/ Short term
    JNJ Long Term/ Intermediate Term/ Daily Trend/ Short term
    PG Long Term/ Intermediate Term/ Daily Trend/ Short term
    NATURAL GAS PLAYS
    APC Long Term/ Intermediate Term/ Daily Trend/ Short term
    EQT Long Term/ Intermediate Term/ Daily Trend/ Short term
    COG Long Term/ Intermediate Term/ Daily Trend/ Short term
    NBL Long Term/ Intermediate Term/ Daily Trend/ Short term
    XEC Long Term/ Intermediate Term/ Daily Trend/ Short term
    ECA Long Term/ Intermediate Term/ Daily Trend/ Short term
    DVN Long Term/ Intermediate Term/ Daily Trend/ Short term
    CHK Long Term/ Intermediate Term/ Daily Trend/ Short term
    BUFFETT STOCKS
    JNJ, PG, DVA, IBM, USB,COP,WMT, AXP.CVS
       


       
     
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