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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 17, 2008

Welcome to Options Expirations week

I keep hearing that no rallies are possible here or if they are they will be limited. They are playing this one very close to the vest. If there is a rally I am sure that everyone will sell into it. We have had so many failed rallies that I can't count them all. Each rally fails and we seem to have one a day. Each rally is followed by wave after wave of selling squalls. At some point there will be no sellers left and I think we are getting there. There are, however, lots of buyers. Everyone is in cash being safe or the traders are short and shorting every rally. This is an explosive situation. to the upside waiting to happen. When it is ripe it will happen.
I have done nothing today still long and waiting. The G 20 was over the weekend and it was said it accomplished nothing. That is what you would expect at this time and with this news. GM will get the money but the stock will sell off like all the rest that have gotten the money. The critics say we have spent all this money and are getting nothing out of it.
It later stage declines at the end you get into a grinding out move were day after day is a downer. I am starting to believe that this is where we are and would not rule out a break of the lows before we get the rally I am expecting. That would be a depressing feeling for the longs now. That would be the last straw for many traders. If the lows are taken out I am a buyer.
The only thing that guides me is that when I see his much stimulation going into the system and I see the Government debt market selling so much debt at extremely low interest rates I will just stay the course until it works. It is the opposite of what the Fed was doing in 2006 and the first half of 2007. They said it didn't work and the world economy was going to carry us. It didn't matter until it did and now you see the results. This is the opposite. I will stay the course. The beat goes on...Mikey

Note: MCD 56 and YUM 26 touted as bucking the trend recommended as buys. They should be hurt like everything else. MCD is way out of line I am still short this on along with YUM NSC UNP and NKE they all need to catch up.
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