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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

Wednesday, October 29, 2008

Mikey Likes it..The missle has launched.

The good thing about this rally is that it does not make sense. Remember the rally after the bailout bill passed. It made sense and the traders expected the the market to rally. Then we had the rally after the announcement that the central banks were going to back everything. The traders thought we would rally on that one too. This rally is 1300 points off the low and came for no apparent reason. They said it was bargain hunting. Now that is a rally I can get behind. Now we keep going until the rally makes sense.
Look for the commodity stocks to rally sharply now. UYM 18.80 DIG 33 are the ETFS I own. Along with IP and ACI. I expect Gold to have a short bounce but at some point in this process the ALL CLEAR signal will be given for the market and at that point I think Gold does the el foldo and makes it move to 450.

8:52 DJIA 9070 VIX 69.01 Oil 67.06 +4.33 Gold 765.90 +25.40

Look at this:
Fed Rate Cut May Not Have A Major Impact on Stocks
Wall Street is waiting to collect on a rate-cut IOU today from the Fed, but the central bank's move is unlikely to cause a major shift in the markets.

Richard Drew / AP
--------------------------------------------------------------------------------
The market is expecting a half-point cut in the Fed funds rate, and anything less will be seen as a big disappointment.

Why a Rate Cut DOES Matter
Former Fed Officials Weigh In
"From a sentiment standpoint it's anticipated, and if we don't get a rate cut I think we're going to have problems," says David Twibell, president of wealth management for Colorado Capital Bank in Denver. "It will give the impression that the Fed, despite all their actions, may not be willing to take the extra step most people expect them to take and want them to take."
As part of an aggressive strategy to push banks into more lending, the central bank has slashed its main lending rate to 1.5 percent, so it doesn't have much room left before it runs out of rate-cut ammunition.

I love this the market rallies 1000 points 1300 points off the lows and a rate cut do not matter. What are you smokin?

To put this into context it did matter when the Fed was cutting the rates when the market was selling off from its highs. Now it doesn't matter. I get it it doesn't matter when we are bottoming and is does matter when we are topping.

CNBC just ran a segment on Gold entitled "Solid Demand"
It was a tout for gold. This Gold firm says Gold demand is going through the roof because investors want to own gold because of turmoil in the markets. ... You know the old flight to safety. They said they are hiring Real estae brokers. My God haven't these poor SOB's been killed in real estate already now they are going to kill their clients in Gold. I LOVE THE DZZ looking to add on if it gets to 33.50
When the all clear signal is given on the financial system...and it most certainly will..then Gold will drop like the stock market and real estate did. The public has gotten wacked in Real Estate and in the Stock market, and the commodities markets and now they wil be killed in Gold. The beat goes on...

9:16 CNBC Fed Funds rate does not matter discussion. ...Perfect. Just before the rate cut it doesn't matter what the Fed does. Oh sure it doesn't.

The plays in the DIG and the UYM are just short term trades. Long term I like the XLF and UYG and DZZ

10:15 DJIA 9118 +54.40 VIX 68.20 Gold 758.70 +17.20 Oil 68.23 + 5.50
Gasparion on CNBC says there is a plan being proposed for the Government to fully back MBIA (MBI) 8.47 and AMBAC (ABK) 2.87 if that is ture these are cheap already own 1 position on each.

10:45
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