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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

Tuesday, October 7, 2008

Short sales

The short sale is where the trader sells stock he does not own and that stock hopefully declines and then he buys it at a lower price. In other words, he sells high and buys lower. I mentioned to you that every market has a story and when that story has accomplished its purpose the investors are left hold the bag. Today I am putting on several short sales on stocks that were yesterdays story but have not yet had the decline they should have.

NSC Norfolk Southern 56.93 Short Sale(ss) 1/4 position
MCD Mcdonalds 56.70 (ss)1/4 position
NKE Nike 59.82 (ss) 1/4 position

I expect each to return to their 2003 price levels. They still have good earnings but in the end should join their fallen brothers.

I am not changing my position on the market these stocks are still up and should join the party.
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