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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, November 24, 2008

Market reverses on New treasury Sec and Citi Bailout

DJIA 8296 +250 VIX 64.25 Gold 824.90 +34.10 Oil 54.26 +4.33

The game has changed. The new guy at the treasury wanted to save Lehman and is supportive of the TARP. The last administration was in denial until 3 months ago and they did not to bailout anyone and were late to the party. Then on the bailout they only spent half of it. Their respose has been less than was necessary This rally is about the new administration and what they will do. With this move the capitial position in Citi makes it the strong capitial position on the banking industry. They wiped out 300 billion of toxic assets

The selloff last week was like Nero fiddling as Rome burned. The game is now is to take the toxic assets of of the banks books and make the Govenment the holder. That is what this is all about. What a surprise. Last friday Citi was going under and the unseen hand grabbed them as they were falling. Never rule out the unseen hand. The rally we have here make be a big one because no one believes it. The beat goes on Mikey
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