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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

More banks sells stock

Three Big US Banks To Sell Stock, Repay TARP

Three big U.S. banks announced large common stock offerings on Monday and said they would use proceeds to repay funds received under the government's bank bailout program.

U.S. Bancorp said it plans to raise $2.5 billion, Capital One Financial roughly $1.75billion, and BB&T $1.5 billion.

Capital One [COF 28.41 -2.93 (-9.35%) ] said its offering will total 56 million shares.

BB&T [BBT 25.13 -1.20 (-4.56%) ] also said it will reduce its quarterly dividend 68 percent to 15 cents per share from 47 cents, saving $725 million a year, following 37 straight years of dividend increases.

U.S. Bancorp [USB 19.49 -1.05 (-5.11%) ] also plans to sell medium-term notes.


In premarket trading, shares of U.S. Bancorp fell 3.7 percent, Capital One 8.7 percent and BB&T 6.6 percent.

The three banks were among the 19 lenders to undergo government "stress tests" of their ability to weather a long and deep economic downturn, and were among the nine found not to need more capital.

U.S. Bancorp took $6.6 billion from the government's Troubled Asset Relief Program, while Capital One took $3.55 billion and BB&T $3.1 billion.

Hundreds of lenders took money from TARP, which was designed to spur lending and improve the economy.

Yet many now view TARP as an albatross that imposes too many restrictions, including on executive pay, and suggests that recipients are desperate for capital.


"Rational, objective lending is one of the most important purposes of the banking system, and when you inject Congress and the administration into it, it effectively politicizes the process, which is not healthy," BB&T Chief Executive Kelly King said in an interview on Monday.

King also faulted the stress tests, saying they unnecessarily created "huge levels of anxiety and concern" among investors.

"Regulators have always had the ability to assess the capital of institutions, and require more if they chose," he said.

On Friday, Wells Fargo [WFC 27.52 -0.66 (-2.34%) ] and Morgan Stanley [MS 26.71 -1.49 (-5.28%) ] , each found to need more capital under the stress test, sold $8.6 billion and $4 billion of stock, respectively. Morgan Stanley also sold $4 billion of debt.

Goldman Sachs and Morgan Stanley are arranging the U.S. Bancorp stock offering. Barclays Capital is arranging the Capital One stock offering. Goldman Sachs, JPMorgan and Morgan Stanley are arranging the BB&T stock offering.

Take a look at the chart pattern for COF. It is right at the 200 day average. Now look at GS and notice that they sold stock on 4/14. The stock got hit hard for 2 days and then ran back up. Now today COF, BBT, and USB announce. I would expect them to get nailed for a couple of days too. DHI announced an offering last week notice the hit. It is now stabilizing near the 200 day. I believe that is what is going on with the market and the banks now. They will sell their stock one by one and then rally after the sale. They need time to get this done. I still think we need to go higher in here to get the traders and public more excited. I do believe that after this month the economy and the market have a rough time. ...Mikey


ABK high 2.09 almost hit 200 day. MBI ABK and MTG need to sell stock too
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