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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

Monday, October 6, 2008

Get ready for the Shock and AWE of the 700 billion bailout and the FED intervention

The Fed can expand the amount of liquidity into the market almost infinitely. The Fed will auciton off 450 billion into the market in a come and get it rate. In other words, the Fed is a bottomless pit of capital.
The bailout allows the treasury to use a portion of the 700 billion to make direct equity injections into companies. That's right a portion of 700 billion can go into equities. I think I'll bet on those guys. I wouldn't want to call a 700 billion bet even with a straight flush. Think about that little bit of information before you sell your stocks.
I'm putting my money on with the 700 billion.
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