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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

Newspapers USA today and LA times say rally won't last

Get the LA Times and the USA today and read why this rally won't last.

I would expect that there will be some pullback after the FED anounces the rate cut.
That will get the shorts back in this thing. I am not very good at the short term market but I strongly believe that we have turned the corner on this selloff and are in a intermediate advance. These things usually last 12 to 16 weeks. The fact that all the newspapers and touts on TV are saying that it will not hold is typical at this stage of the advance. The news is still bad and the public will not buy it as long as the experts remain negative.
In the article about the rate cut this AM they said they expect a 1/2 point cut. If they cut 1/4 then I would assume some pullback in the short term to "reflect this dissapointment". The pullbacks are just buying opportunities if we get them. They are pitching Gold today and that still makes sense to the public. I am hoping Gold will rally enough for me to add on to my DZZ(short Gold) position.
The credit markets continue to improve but that story is still not a good one and what I am looking for to sell my longs is when that story is resolved favorably.
The touts are saying don't get excited about this rally and the shorts are just laughing at it. These are the best conditions I can imagine.

11:20 DJIA 9062 UNCH Fed cuts rates 1/2% to 1% and discount rates 1/2 ..selling off now as expected..remember it won't matter..right
Posted by at

2 comments:

jaxwhitey said...

I hope gold rallies back to $800, I will dump my account into GLD puts

Still holding my Mar 60 puts, up 200+%, but nowhere near what I will let them go for.

October 29, 2008 at 11:37 AM
jaxwhitey said...

Also sitting on some Nov 30 DIG calls still

Still haven't gotten into AA but have orders waiting to be filled for DEC calls


Christmas may be coming early this year Mikey

October 29, 2008 at 11:40 AM

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