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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

Tuesday, June 9, 2009

The Eye of the Storm

DJIA 8742 +-21.01 SPX 937.73 -1.36 VIX 29.47 -.28 Gold 956.50 +4.00 Oil 69.17
+1.08.43 Dollar Index 80.16 -.08 TLT (Long Term Gov Bonds) 90.20 +.59 IEF (7-10 Yr Gov Bonds) 88.70 +.55

The 200 day on the SPX is at 916.62. We were at 929 on May 8 th. If you remember my posts in early May the talk was that normally you sell in May and go away but not this year. That was after the rally in April that took us from 666 to 888. That was a 33% move off of the low. The "experts" have since turned bullish and 90% of the "economists" are touting a bottom in the economy later this year.

The banks are paying back TARP and the crisis is over. Now all we have to do is sit back and invest for the long term. That is the message. The way you are suppose to invest is by investing in inflation, you know the drill Oil, Gold, emerging markets. That is the same nonsense they told us in 2007 and 2008. How did that do for you. This is the same old song with the same old "experts" helping the boys get out of all that stock they had to buy last year. This is an engineered rally that is doomed.

The question of when this charade will end is anybodies guess but it will end and those who buy the recovery/inflation idea will get burned again. For now the ship rolls on over calm waters....This is the eye of the storm.


Mikey
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