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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, July 14, 2009

Merrill Thinks the recession is over...It must be true Merrill said it

Oh the recession is over now so says Merrill Lynch. These are the guys that were saved by Bank of America that had to be saved by the Treasury. How interesting that Bernanke mentioned recovery yesterday. I would agree that if we had a recovery it would be jobless.

It is nice that over the few days we went from head and shoulders to THE RECESSION IS OVER! I forgot to mention it but this week is options expiration's week and all the puts are now going to options heaven, courtesy of this last rally. That is a common ploy counter trend moves into expiration. That kills the option traders. In other words you can be right and lose. Options are not a good thing to do.

Looking to short EWZ (Brazil ETF) now at 49.90 expect it to take out the lows by the end of the year. Low was at about 30. I think next year it will hit 18 to 20.


This rally was designed for the options market and to spook the shorts. Now they bring out all the experts and show us the "good "earnings". This thing has a long way to go down and they are doing it slowly. It should be a mess by the end of this year and next year looks very very ugly to me.


The beat goes on ....Mikey
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