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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 3, 2008

Where are we now ,,,What is the game now

8:39 DJIA 9348 +23.10 VIX 55.77 Gold 726 +8.70 Oil 65.84 -1.87
What they need to do now is to convince the traders that the market discounts the future and will bottom before the economy does. That these prices are so low that you have to buy now. That everyone knows that things are going to be bad and that is baked into the prices now it is discounted and it should be bought. We will rally until the majority of traders and shorts believe this. Then and only then will they blow this thing away. We are not there yet.
Things will be bad, really bad and next year will be a disaster for the economy and the stock market but the insiders need to sell the stock that they just bought at higher prices before we will rollover and blow the lows out. The jobs report is going to be bad ...who cares. The next round of earnings and economic news will be in Feb. that is most likely the next time the market gets it butt kicked. The VIX index indicates alot of puts have been bought most of these puts will have expired by Feb. This is where I think we are now.
The same type of thing happened in 9/1/01 (911). The market went into a tail spin and the Fed stepped in and pour massive liquidity into the markets. That produced a 4 month rally from Sept into Feb of '02. That rally was from 8000 to 10500. Stocks looked cheap at those prices and the rally was very exciting. The problem was that the economy did not bottom until Oct '02. The market bottomed in Oct '02 at 7200 or 800 points lower than the 911 low. It tried to retest that low in Mar '03 when we were going to war. So it was about a year to a year and a half later until you wanted to be in the market. This event looks very similar to me. I would expect a rally attempt until early next year maybe as high as 11500 and then a lower low in about the high 6000's. For now I am trading this rally until I see the traders embrace the stock market is cheap theme. The beat goes on...Mikey
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3 comments:

jaxwhitey said...

Are you still long DIG Mikey or did you get out already?

November 3, 2008 at 11:36 AM
Mikey's trading account said...

JAX I still like the DIG think it is going to go higher with the market. Hang in there..Mikey

November 3, 2008 at 11:55 AM
jaxwhitey said...

I'm not going anywhere until $40. I thought today was going to be the day we got there based on oil/Dow futures late last night/early this morning

November 3, 2008 at 12:05 PM

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