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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 27, 2008

Wallowing around in the sea of unknown..Yada Yada Yada

The news background this AM:
DJIA 8299 -79
Markets Fear Central Banks Won't Prevent Recession
Markets around the world remained volatile as investors worried that a flurry of central bank moves this week would not be enough to stave off a global recession.
US stocks bounced back and forth between positive and negative territory as Japanese stocks tumbled to 26-year lows and European markets fell heavily in chaotic trade.
Little that officials said could convince panicky investors that governments can stem the fast-spreading crisis that is menacing financial markets, economic growth and company earnings
We are wallowing around in the sea of unknown. Until the capital market situation is eased and the money comes out of governments into the banking system we are not going to see anything different. Recession remains on everyone's lips and is the top concern," said Howard Wheeldon, strategist at BGC.

Who in their right mind would buy this market under these circumstances. I mean it is sooooo uncertain and scary right? Just in time for Halloween.
Well at 14000 last year these same scary guys were telling us that the Global economy was the new paradime and oil was going to $200.

Look at this...
Beutel: Crude Could Hit $20 A Barrel
A fast and furious as the crude oil market selloff has been, it's far from over, says one expert.
"The pendulum does swing much faster than we give it credit for," says Peter Beutel of Cameron Hanover.
Beutel says $37 a barrel is likely, even $20 a barrel isn't out of the question.
"If we look at every bear market over last 30, we always cut the high by four," says beutel, which is how he gets the $37 number.

Well I agree with him but that is for later not now. Why are we seeing this guy now after oil has dropped from 150 to 62. Dude why tell us that now?

Oil stocks are poised for a nice trading rally in here.
DIG ...double long Oil stock ETF 26.48
XLE... SPDR Oil index 43.15
Have at least a 30% pop in the from here.


What do we know for sure this week:
1)We are in a recession
2)Oil prices are going to fall at least another 20 bucks.

If you make your investment decisions based on these two certainties over the next 3 months you will lose money. What will make these tow ideas wrong...The Law of Uncertainty.
Put Options expire on November 21 let's see where these two are trading then. On November 21 I will take you back to this day
I remain commited to my long side trades
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