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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

Thursday, May 21, 2009

Banks upgraded by Goldman.....They think we are brain dead

Goldman Sachs upgraded large US banks to "neutral" due to the substantial capital raised by the banks and prospect for strong gains into the second quarter, the Goldman's analysts said in a research note.

The move follows the recent upgrade of Bank of America [BAC 11.77 0.28 (+2.44%) ] to "conviction buy," alongside JPMorgan Chase [JPM 35.02 0.47 (+1.36%) ], and takes into account "the prospect for continued strong mortgage and capital markets earnings which is likely to persist in the second quarter," the analysts wrote.

Besides, "the leveraged loss cycle for large banks may be over," they wrote, noting that the stress tests induced $100 billion of capital raised at big banks, cutting leverage. Writedowns may also be nearing an end as stock market indices are improving.

Goldman Sachs [GS 136.91 0.47 (+0.34%) ] rates Morgan Stanley [MS 28.43 0.43 (+1.54%) ] at "buy" and PNC [ Loading... () ], US Bancorp [USB 18.14 -0.34 (-1.84%) ] and Wells Fargo [WFC 24.73 0.27 (+1.1%) ] at "neutral." Citigroup [C 3.71 0.02 (+0.54%) ] is not rated.


Trust banks such as Bank of New York Mellon [BK 27.40 0.74 (+2.78%) ], Northern Trust [NTRS 51.60 0.69 (+1.36%) ] and State Street [STT 43.10 1.72 (+4.16%) ] were upgraded to "attractive," while regional banks such as Fifth Third Bancorp [FITB 6.90 -0.81 (-10.51%) ], KeyCorp [KEY 5.45 -0.19 (-3.37%) ] and Regions Financial [RF 4.09 -0.80 (-16.36%) ] were maintained at "cautious".

These banks have less capital, benefit from improving credit spreads, derive 7 percent of their revenue from mortgages versus 20 percent at big banks, and still have capital raises ahead of them "as they play catch-up to the stress test," the note said.


This is the fox guarding the chicken coupe
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