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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

Wednesday, April 1, 2009

The "That" and where are we now

DJIA 7712 +103 Gold 928.50 +3.50 Oil 48.31 -1.35 VIX 42.78 Dollar Index 86.02 +.12

What is the "That". The "That" is a price that you never thought would happen. It is beyond cheap. It is a price that tells you "that" you could lose everything and that it is hopeless. We have seen the "That" in the Autos, the banks, the housing markets, the insurance companies and the economy in general. I always buy cheap early and have to experience the "That". It is not a pleasant experience but once you have the "That" you have the all clear signal. That is the good news. The price has moved from cheap to the "that". That is where we were one month ago.
Where are we now? The market has had a substantial rally off of the lows. There is a growing number of "experts" that are saying that we have bottomed and it is time to buy. This is no mans land where the shorts are wanting to cover but only on a selloff. The longs want to buy but only on a selloff. The prices are extremely cheap here but because we have had the "that" the traders are afraid to buy at this level. For that reason I do not think we get a significant pullback from here. I think we are letting the sellers out here and have more to go on this move. My guess is that in 3 to 5 months we will be back to the breakdown at 10500.

Added to my General motors today @1.87 Why? because today is the "That" on GM

The beat goes on..... Mikey
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