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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, December 2, 2008

Remember "Don't fight the Fed and lower oil prices are good

DJIA 8216 That was at the top. When we topped in Jul of 2007 every sell off was met with a big rally as the Fed cut rates. The message was don't fight the Fed.The experts then said the sell off was temporary and hold for the long term. Now the Fed has cut the rates to 1% they are monetizing ever thing in sight and the oil prices have dropped to 50 bucks. This is incredibly stimulative. Guess what, every time the Fed does something the market has a one day rally and then sells off.
The mid set of the investor is to put their money in T Bills at less than 1%. Why? Now, the experts they say be safe avoid risk and they don't even mention the Fed. Its not hard to predict the outcome here. Listen to the experts they will give you the answer.
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