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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, November 4, 2008

TARP may be expanded

DJIA 9580 +260 VIX 45.75 Gold 743 +16.40 Oil 66.87 +2.96
Remember the 700 billion. First it was just to buy bad mortgages. Then it was to be directed to certain banks. Well now it may be expanding to a broader group of unregulated financial companies, GE and CIT are mentioned. That means they get the money and the Treasury has an equity position. I think end the end no one will be left out. The DJIA is now up 260 to 9580 Still good news but not the kind of news that is a deal breaker. Good for the financials you bet. Before its all over I think everyone even the lowly Autos get a piece of the pie. What I am think is that there will be an economic bailout package similar to the financials announced in the months after the election.
VIX is in full retreat now when it gets into the 20's the rally will be 90% over.
Gold having a good day I am look to add to DZZ in the 33 area. Still holding all previous long positions no adds.
As an aside, notice how Cramers DE tout yesterday is up 3 points today. His act is that in the short term his picks work, in the long term it kills you.

8:45 GOLD 762 +35 Entered buy on DZZ at 33.75

Target on this rally is 10200
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