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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, June 1, 2009

Why am I looking to short if I think prices will move higher?...Because this Dog won't hunt

I am looking to sell now and short in the future because the our economy is coming down off of multiple bubbles. The Real estate bubble, the consumer bubble, the commodities and oil bubble and the China and Emerging Markets bubble.

The Real Estate bubble topped in July 2005 and you can see that it is still trying to bottom. It is in its 4th year from the top. The consumer bubble topped in Feb 2007 and is only 2 years old. The Emerging Markets topped in October 2007 is only a year and one half from it highs. The Oil and Commodities bubble topped in Jun of 2008 and is just 1 year into the move. .

By comparison, the Tech bubble topped in March of 2000 it is 9 years old and is still trying to bottom. Take a look at INTEL now 16.48. It's high was in August 2000 at 75.81. The stock sold off to 19 in Sept 2001 and rallied to 36 in Jan of 2002. That was a 3 month double but by Oct of 2002 eight months later it had taken out the lows and dropped to 12.95. I think the oils are in the same condition that INTC was in late 2001.

If you will notice KBH (KB Homes ..a home bulider topped in July of 2005 at 86 and one year later is made a short term bottom at 37.89. I remember that in the summer of 2006 Mr. Jim Cramer came on CNBC and said " I am planting the flag for home builders, they have bottomed. Well they did and KBH and rallied until Feb of 2007 to 56 but by July of 2007 it was back at its low of 38 and by the end of the year it was 18. The problem was just like INTC it was a false bottom. Sorry Jim.

THIS IS WHAT I AM WARNING YOU ABOUT NOW. THE EXPERTS INCLUDING CRAMER ARE TELLING YOU THIS IS A BOTTOM IN THE ECONOMY AND THE MARKET. IT IS NO MORE THAN WHAT HAPPENED TO INTC IN JAN 2002 AND KBH IN JAN 2007.

What I am saying is that this rally in the oils and commodities has to be sold and quickly because they are going to blow out their lows by another 50%.

THIS DOG WON'T HUNT........MIKEY
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