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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

Thursday, October 9, 2008

Bush..Paulson..."it's going to take a long time"

7:22 AM DJIA 9329 VIX 53.99
Why are they saying this? It is not very encouraging is it? You would think that they would be more positive more forceful but it seems that the message is that this malise is going to last a long time. You know deal with it we are screwed. Woe is me yada, yada, yada. All that is missing is to have a picture of the Titanic hanging on the wall behind the podium, or how about a picture of the Hindenburg going up in flames and have the press conference held at the blue moon cafe. Very strange don't you think?
Well Mikey says a 3000 point rally is right around the corner. That ought to perk you up. This process of rally failure is going to lead to a big rally ..Deal with that Bush and Paulson.

By the way the no short rule is lifted for the financials today ...Nice because the financial index is making a new low. OK shorts now you can short at new lows. It looks to me that this thing is starting to stablize now. I expect rally attempts followed by failures for about a week. I am guessing that the rally is setting up for later next week. If we can keep failing and Bush and Paulson can keep pouring cold water on this thing for another week then the stage is set for the launch. Better days are dead ahead.

On the XLF I will add to my first buy of 18.60 when Wells Fargo, JP Morgan and Citibanks approach their last lows pre bailout. I may be able to get that in the 12 area. Insurance and banking stocks
7:48 AM DJAI 9186 VIX 55.49
CNBC says "GM shares plumeting bring the year 1929 into focus" Now there is some good news to think about." They are there when you need them aren't they. The kind folks at CNBC just presenting the unbiased news. I am keeping this running account so you can look back at them after the rally and understand how this thing is done.
We are starting to see word like plunge pop up now all the words you hear at the bottom

8:08 AM DJIA 9117 VIX 56.60 The message is that the "Paulson Plan is not working.

CNBC Mallisa Francis: "What is the mood on the floor (NYSE) now Dillon?
Dillon Radigan: "The reality is not the the American people but the investment community the largest investor and the smallest investors suffered a massive breach of confidence. What you are seeing right now is the result of the breach of confidence and when you get good news you are not seeing a willingness to assume risk until people feel that have had enough time to see how the financial system will be restuctued and how bad the problem actually is. The message is it is going to take time. That's the central message that it is bad and in the near term it is not going to improve. The improvement is months away. I hear the Fed is out of bullets. I say BS They have a bazooka not a peashooter aimed at the shorts and the sellers. When the time is right, and its close, they will fire.
Don't listen to them stick with Mikey
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