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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 28, 2009

Mikey Sells GM stock

General Motors' bondholders have accepted an amended debt for equity offer, CNBC has learned.

The bondholders will start with 10 percent equity, 7.5 percent more at both $15 billion and $30 billion market cap. GM [GM 1.28 0.13 (+11.3%) ] will emerge from this deal with $25 billion in secured debt.

The offer came Thursday morning from GM and the Treasury Department. However, the move may not stop a possible bankruptcy for GM.

But in exchange for the improved payout, creditors would agree not to oppose a move to sell GM's profitable assets to a new company funded by the U.S. government in a fast-track bankruptcy process.

The exchange offer will be open to bondholders until 5 p.m Saturday EDT, GM said.

The largest U.S. automaker had failed up until Thursday to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy.


They had balked at proposals that they forgive $27 billion in debt in exchange for a 10 percent stake in a restructured company. A member of the bondholder group resigned from the ad hoc committee of bondholders negotiating with the U.S. government Tuesday evening.

GM has been kept in operation since the start of the year with $19.4 billion in emergency federal loans as a plunge in sales overran progress it made in cost-cutting over the past four years.

The U.S. Treasury Department released a statement on the bondholder deal:

"The Treasury proposal announced today provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue a 363 sale as part of a bankruptcy proceeding.

Implementation of this proposal would result in a New GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success. GM appreciates the unwavering support of the U.S. Treasury and the President's Task Force on Autos and thanks the unofficial committee of bondholders for their support of the proposal

Reported on DJ news service at 9:52 AM ...The plan does not include shares for the current shareholders...game over... sold at 1.33

CNBC has reported that the plan may include a 10% ownership for old GM shareholders but they are not sure what that meant. In a press reslease I read this AM it said the old shareholders would not receive any shares of the new company so there you go. They are playing this thing right up to the end. Stock trading at 1.33. If there is no stake for the current shareholders then the current stock is worth zero.
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