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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

Friday, July 10, 2009

Death by 1000 cuts

DJIA 8115 -67 SPX 876.83 -5.85 VIX 29.72 -.06 Gold 912.17 -3.50 Silver 12.61 -.32 Oil 59.85 -.56 RBOB (Whsl Gasoline) 1.6505 -.0133 Dollar Index80.43 +.48 EURO 1.3950 -.0085 (Long Term Gov Bonds) 96.21 +.86 IEF (7-10 Yr Gov Bonds)62.21 +.59 XLF (Tech Index)17.46 unch XLE (Oil Index)44.55 -.45 EEM (Emerging Markets)30.86 -.42 FXI (China Index)36.58 -.56

Everything but the bond market is getting nicked every day now. We are at the 877 neckline of the "head and shoulders" top area now but are holding. The chart formations and technical speak just take away the attention of what is going on. That is a slow strangle of this economy. They say that there are buyers at the 835 area if we top here. That would set up a longer term head and shoulders bottom. What does that mean? Well I will tell you...NOTHING! They want you to focus on the short term and trade. Could we rally here? Of course, but it before its over we take out the lows.

I look for this thing to end bad and I see nothing being done about it at this point. The consumer needs to be bailed out and that is not happening. Until I see real steps being taken in this area I remain bearish.


The beat goes on...Mikey
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