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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

Friday, January 16, 2009

The Banks are the FED ...A slam dunk

DJIA 8262 +46.59 VIX 46.96 Gold 839 +32.20 Oil 36.12 +.72 Dollar Index 84.10 -.33

This is todays news:

Citigroup Splits Into Two After Losing $8.3 Billion
Citigroup, scrambling to survive losses triggered by the credit crunch, unveiled plans to split in two and shed troubled assets, and reported a quarterly loss of $8.29 billion.

The banking giant also said it expected more departures from its embattled board, which is losing former Treasury Secretary Robert Rubin as a director later this year.
Mary Altaffer / AP
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Still, the bank's shares [C 3.71 -0.12 (-3.13%) ] rose, in part because investors hoped the plan to separate its most troubled assets into a new company would help revive the company.

"It's one of the first steps toward some positive news and the end of this nightmare," said Michael Holland, founder of Holland & Co in New York, which manages more than $4 billion of investment.

Citigroup's major shareholders
Profile of banking giant
Follow Citigroup's stock
Citigroup, whose shares have plunged 87 percent since the beginning of 2008, said it recorded $28.3 billion of writedowns and credit losses in the 2008 fourth quarter. Losses over the past 15 months total more than $92 billion.

The bank's fourth-quarter loss was $8.29 billion, or $1.72 per share, compared with a year-earlier loss of $9.8 billion, or $1.99 a share.


BofA Gets $20 Billion, Merrill Loses $15 Billion
Topics:Credit | Recession | George W. Bush | Barack Obama | Taxes | Politics & Government | Economy (Global) | Economy (U.S.) | Banking
Sectors:Financial Services | Banks
Companies:Citigroup Inc | Merrill Lynch & Co Inc | Bank of America CorpBy: Reuters | 16 Jan 2009 | 07:53 AM ET Text Size Bank of America posted its first quarterly loss in 17 years Friday and slashed its dividend, hours after winning a multibillion-dollar lifeline from the U.S. government to help absorb Merrill Lynch, which lost a record $15.31 billion in the quarter.

Bank of America [BAC 7.18 -1.14 (-13.7%) ], the largest U.S. bank, lost $1.79 billion, or 48 cents per share, in the fourth quarter, compared with a year-earlier profit of $268 million, or 5 cents. Net revenue increased 22 percent to $15.68 billion.



At Merrill, the loss was $9.62 per share, driven by significant writedowns of troubled assets.

Bank of America announced the results hours after it won $20 billion in new capital from the government's $700 billion Troubled Asset Relief Program (TARP).

"They were probably one of the best banks out there, balance sheet-wise, until they did the Merrill deal," said Cassandra Toroian, chief investment officer at Bell Rock Capital in Paoli, Pennsylvania, which owns the bank's shares.

Speaking of the results, she added: "None of it's a surprise at this point.

I think it's really unfortunate that they had to cut the dividend." The bank slashed its quarterly dividend to a penny from 32 cents.

With the latest capital infusion, Bank of America has taken $45 billion in TARP money, the same amount as Citigroup Inc , which won its own rescue package in November.

Citigroup [C 3.74 -0.09 (-2.35%) ] also reported fourth-quarter results on Friday, posting an $8.29 billion loss, and said it plans to separate into two units after its own massive credit losses.



Shares of Bank of America rose 5.8 percent to $8.80 in premarket trading, though well off their highs for the morning. Citi gained 5.7 percent to $4.05.


Through Thursday, BofA shares had fallen more than 81 percent from their 52-week high last February.

Government Shares in Losses

Bank of America Chief Executive Kenneth Lewis sought government help to combat losses at Merrill, which the company agreed to buy on Sept. 15 after less than 48 hours of talks. The original $19.4 billion transaction did not get government assistance, and closed on Jan 1.

John Thain, Merrill's CEO, became Bank of America's head of global banking, securities and wealth management.


Mikey says:

The truth is that the buyout of Merrill and Countrywide was orchestrated by the Government. The banks are having there debt backed directly by the FED and the Treasury. PEOPLE YOU CAN'T GET AN INVESTMENT ANY BETTER THAN THAT. iT IS FDIC ON AN EQUITY.

My next buy on the UYG is 3.25 This is an amazing opportunity to me.

I believe that Citi(3.75) and Bank of America(7.27) are great buys here particularly Bank of America
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