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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

Saturday, August 1, 2009

The better than expected month comes to a close with a better than expected GDP

The Dow pulled off a modest gain Friday, capping a rocky week — and month.

Stocks had been positive for much of the day after a GDP surprise and encouraging reading on manufacturing, but it got a little crazy in the final half hour of trading, with the Dow threatening to tip into negative territory.

The Dow ended up 17.15, or 0.2 percent, to close at 9,171.61. The S&P rose 0.1 percent, while the Nasdaq fell 0.3 percent.


Major U.S. Indexes
Last Today's % Change 1 Week % Change MTD % Change YTD % Change
Dow 9171.61 0.19% 0.86% 8.58% 4.50%
NASDAQ 1978.50 -0.29% 0.64% 7.82% 25.46%
S&P 500 987.47 0.07% 0.84% 7.41% 9.32%
Russell 2000 556.71 -0.20% 1.50% 9.53% 11.46%
CBOE VIX 25.85 1.77% 11.95% -1.90% -35.38%
FTSE CNBC Global 300 4051.57 0.73% 1.92% 8.63% 12.31%



For the week, the Dow gained 0.9 percent, helping bring the blue-chip index its best July since 1989.

It was an eventful week for stocks: On Thursday, key indexes reach their highest closing levels since November, when the downturn began. More than $200 billion in Treasurys were auctioned, most of which were met with tepid demand. M&A activity started to pick up in the tech sector and Microsoft and Yahoo finally reached a search deal after months of flirting and bickering. It was a big week for oil earnings, which reflected the toll of the sharp drop in oil prices. Day traders were credited with some of the gains this week but there was some substantial buying as economic reports have started showing some glimmers of hope.

The big number of the week was today's GDP report, which showed the economy contracted at a 1 percent annual rate in the second quarter.

The headline number beat economists' expectations of a 1.4-percent decline, but the market had been anticipating that in the past few days and rallied on the rumor. So, initially today, there was some selling on the news. Plus, the prior two months, which had already been showing pretty severe declines, were revised lower, so there was some selling on that.

There was some encouraging news on the manufacturing front: A Chicago group said manufacturing activity had picked up in the region in July, and in fact, was its best reading since September.
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