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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, May 27, 2009

I like Government bond market now

DJIA 8368 -106 SPX 899 -10.64 VIX 31.36 +.74 Gold 952.10 -1.20 Oil 63.38 +.93 Dollar Index 80.38 +.18

TLT (Long term Gov bonds) 90.83
IEF (7-10 year Treasuries) 90.11

I have not bought but like these prices. The rates are moving up on Government bonds now. The experts are putting people in Tax Free, Corporate, and Junk bonds to capture high yields. That is a big mistake. This last market bottom and "bottom" in the economy was brought on by those lower rates. I think that the Munis, corporates and Junks bonds have severe default risk now and I think the market will follow the bond market lower. The best play is to be safe and buy government bonds now. The recession is ending talk is premature and with the increase in rates this phase of the Stock market and economic rally is coming to a close. Just take a look where the public money is going now...Oil, Gold, commodities and back into the market. The experts like energy stocks, techs stocks and even the banks now. I would avoid these groups now. I still have not shorted anything but would like to short the oils.

I have not given up on GM 1.20 yet. I believe that if it rallies now that rally is real and I will chase it. I still smell a setup. Why is it trading at 1.20 if the deal is dead????

The beat goes on ...Mikey
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