Posting Times

Posts will be between 8:30 PM to 10:00 PM PST
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, February 2, 2009

So you thought January was going to be good?...They are looking for a retest now

New Month, But Same Depressing Markets

While investors hoped that a new year would bring better results, a plethora of downbeat earnings reports, poor corporate outlooks, gloomy economic data, and heightened concerns over the health of many large financial firms plagued the markets in January.

For the fifth month in a row, the Dow [.DJIA 7936.83 -64.03 (-0.8%) ] ended up in negative territory – matching its five-month losing streak back in November 2007-March 2008. In fact, the Dow has only posted a gain in three of the last fifteen months.

While January is typically one of the better months for the markets overall, the Dow’s decline of 8.84% last month was its worst January ever. Weighing down the Dow the most last month were Caterpillar [CAT 30.29 -0.56 (-1.82%) ], Wal-Mart [WMT 46.57 -0.55 (-1.17%) ], Bank of America [BAC 6.00 -0.58 (-8.81%) ], and Procter & Gamble [PG 53.05 -1.45 (-2.66%) ]– each of which is at or very near a new 52-week low. Broader indices are faring no better to start out the year, as both the S&P 500 and the Russell 2000 had their worst January ever.

Financials Fall Apart…Again

Although the Dow’s weak performance last month didn’t come close to its huge 14% plunge back in October, financials fared much worse. Don’t let last week’s gains (See Financials Big Gains) fool you – financial stocks performed terribly in January ahead of their earnings reports, with expectations that many of them would post huge losses and need even more capital. Plunging 26.6% last month, the S&P 500 Financials sector had its worst month ever – even exceeding the sector’s 22.7% decline from October, which followed the collapse of the likes of Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. Here are some of the worst-performing stocks in the S&P 500 Financials sector last month:

Fifth Third (FITB) -71%
Huntington Bancorp (HBAN) -62%
SunTrust Banks (STI) -58%
Marshall & Ilsley (MI) -58%
Regions Financial (RF) -57%
Bank of America (BAC) -53%
Capital One Financial (COF) -50%
Aflac (AFL) -49%
Citigroup (C) -47%
State Street (STT) -41%

Over the past few days, the markets have been weighed down by weak economic data, downbeat corporate earnings forecasts, and concerns that many financial firms may post large quarterly losses in the upcoming weeks. Now at its lowest level since December 1, the Dow is down for its sixth straight session – its longest losing streak since the beginning of October. Despite this weakness, the Dow still sits about 10% above its November 21 intraday low (7,449.38) – a level that could be retested in the coming weeks. As we start a new month, February does not look like it will be the start of a turn around.

Mikey says:

The tone of this article suggests that we are going to be waiting a long time for things to improve. It even suggests that we will retest the lows at 7449.
This is standard stuff for these guys because when they really want to buy stock they paint a picture that is hopeless. They will drag this out until their argument is very believable. Maybe February will retest and maybe we sell off until June but the next big payday is to the upside.
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)