Posting Times

Posts will be between 8:30 PM to 10:00 PM PST
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 30, 2009

Mikey's Rule of 2

This is a simple rule and easy to remember. It takes 2 years for the masses and experts to believe something. The nature of the markets is to bubble. A market bubbles when everyone believes the same thing and acts on it. This is manifested in the charts by a straight up exponential move in price that has its biggest spike at the end of the move.

An example of this would be the price move of INTC that ended in 8/00 at 75.81. The believe there was in tech and that even though it was extended it was good for the long term. The stock broke the trend in 9/00 and was at 12.95 in Sep of 2002. The crowd finally believed in 9/02 that the tech story was not valid anymore.

The oil/commodities/emerging market story topped in 5/08 it had bubbled for the prior 2 1/2 years from Oct 2005. The experts still believe that story. They are still selling inflation and world growth. According to Mikey's rule of 2 it will not bottom out until May 2010. If you look at the EEM as an emerging market surrogate then you would expect it to drop to 10 by May of 2010. That is when the story will no longer be believed and we can have some kind of tradeable rally.

The same applies to Oil, China, Gold, Silver, Agg, and Cyclical. They are about 1 year and 65% from their lows.


Mikey
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)