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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, May 8, 2009

No mans land

Major U.S. Indexes. DJIA 8467 SPX914.447.05


Stocks Rise Over 1% as Banks Gain

Stocks rose sharply Friday as Wall Street breathed a sigh of relief after the stress-test results and banks rallied.

"[W]hat happened is, we priced a Great Depression and we got a deep recession," Jim O'Shaghnessy of O'Shaughnessy Asset Management, told CNBC. "I think the difference between that makes this a very sustainable market," he said, adding this is a "once-in-a-generation opportunity to get in at prices that haven't been as good since 1982."
The April jobs report cast a bit of a pall on the market as the headline number showed fewer jobs were lost in April than previously expected but the prior month's payrolls were revised to show a sharper drop than initially reported and the unemployment rate jumped.

Employers cut 539,000 jobs from nonfarm payrolls last month, fewer than the 590,000 expected, according to a Reuters survey. But economists noted that the headline number benefitted from the addition of 72,000 government jobs, mostly for the 2010 census. And, March payrolls were revised to show 699,000 jobs were lost, compared with the 663,000 first reported. The unemployment rate shot up to 8.9 percent, the highest since September 1983.

>> Sector Breakdown: Where the Jobs Were Lost

If you discount the boost from government census jobs, it's still better than the nearly 700,000 lost in March but "it is hardly a triumph or even a stabilization," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.


Wholesale inventories fell for a seventh straight month in March, dropping 1.6 percent to the lowest since November 2007. Economists had expected a more modest 1 percent drop, according to Reuters. Wholesale sales dropped 2.4 percent to their lowest level since November 2005.


Bank stocks were mostly higher after the stress-test results showed 10 of the 19 tested were in need of additional capital, totaling $74.6 billion.

Bank of America [BAC 13.95 0.44 (+3.26%) ] was seen to be the most in need of funds, with a capital shortfall of some $33.9 billion. Citigroup, [C 4.01 0.20 (+5.25%) ] Wells Fargo [WFC 24.81 0.05 (+0.2%) ], GMAC, Morgan Stanley [MS 25.84 -1.30 (-4.79%) ] and Regions Financial [RF 5.79 0.56 (+10.71%) ] were also told to build their cash reserves.

Wells Fargo shares had opened lower but rebounded after the bank priced 341 million common shares at $22 a share raising $7.5 billion, more than expected.

Oil will remain sharply in focus after the price of a barrel of New York light sweet crude [US@CL.1 57.51 0.80 (+1.41%) ] hit a fresh high for the year near $57 during Thursday's session.

In earnings news, Toyota [TM 78.40 -1.84 (-2.29%) ] posted a quarterly loss of $6.9 billion, projected a much deeper-than-expected loss for the full year and cut its dividend.


The overall tone of the market is much better here and I want to take some off the table. They are starting to agree with my position and it is making me a little nervous. I always sell some when that happens. All of the tests have been favorable and I thought we would get a bigger pop and maybe it still will. The VIX is still high at 32.56 so I think this is not a top but I will pullback a little now and check the winds later...Mikey


Oil is starting to get my attention as a short but have done nothing yet
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