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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

Monday, May 11, 2009

Meridith (The Bearish Banker Babe) On CNBC Trashing the Banks

Meridith Whitney is on CNBC again trashing the banks as they all announce their common stock sales.

Would Not Own Bank Stocks: Meredith Whitney
Banks are overvalued and the government enabled them to have better first quarter earnings than they should, well-known analyst Meredith Whitney told
"At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."

Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.

"This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible."

Whitney also said that consumer spending is still going to remain slow. "There's a massive retraction in consumer liquidity," said Whitney. "Credit contraction is happening at an accelerated pace. Consumer spending is going to be less than people expect going forward."

She cited Bank of America [BAC 12.60 -0.34 (-2.63%) ] as an example of credit contraction. "They cut more than $200 billion in credit card lines in the first quarter of this year," said Whitney. "Consumers are not going to spend money."

Whitney also said that the rules of trading have changed because of the government's role. "For investors, you invest on what you know to be the rules of the game," said Whitney. "But with the government involved, no rules apply."

Whitney said the changing rules create a big problem for investors going forward. "The biggest danger here is having the retail investor shout out for a period of time because they don't know who to trust on market values."


What does that mean? It means that this sell off will be over in a hurry. Don't get me wrong I agree with everything she says it is just that they only bring her on when they want banks stocks. I do think that the banks are toast later this year but they need to make more money on their stock to cover the losses that will come later this year. So I will buy this hit over the next few days with the cash I raised last week. Not buying today will let you know ...MIkey
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