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

Monday, August 31, 2009

September is the worst month ...Sell?

DJIA 9450 -94 SPX 1016 -12.67 VIX 26.62 +1.62 Gold 951.60 -7.20 Silver 14.73 -.05 Oil 69.28 -3.26 RBOB (Whsl Gasoline)1.79 -.11 Dollar Index 78.10 -.285 EURO 1.4353 +.0066 (Long Term Gov Bonds) TLT 96.21 -.20 IEF (7-10 Yr Gov Bonds)91.52 +.19 XLK (Tech Index)19.99 -.29 XLE (Oil Index) 50.91 -1.27 XLF (Financials index)14.57 -.18 XHB (Homebuilders Index) 15.41 -.44 EEM (Emerging Markets)35.21 -.21 FXI (China Index)39 -.81

I remember in late August of 2007 when I was about as bearish as I am now that same comment began to spread. Should we sell it's Sept and it is traditionally the worst month. We had a big rally in July that made absolutely no sense and had sold off into late August. The debate about Sept came in and that bothered me because I was short at the time and now the pros were starting to get on my side. I don't like the pros to be on my side.

Here it is again. We have had a big rally and a sell off into late August and they are saying Sept is a bad month. What does that mean? Well in 2007 we rallied all of Sept and topped in October. I would say it is shaping up the same way now. Topping like bottoming is a process. The lows need to wear out the longs and make the shorts feel safe. The tops need to wear out the shorts and make the longs feel safe.

For the record I stayed short all through Sept of 2007 and until Oct of 2009 when I started to buy. I sold my long positions in May of 2009 and was short until July 17Th of 2009. I have been flat from July 17Th until today. At his point I will stay flat probably until Sept is over. I am almost always 5 months early before a new trend begins. The best part of the old trend is the last 5 months when the "pros" let the public win. Therefore, when I begin my positions for the new trend I begin small because I know my history. I turned bearish this May that means that August would normally be a time for me to start to get serious about shorting based on my past history. I will wait one more month this time. My next move will be to short and I will post this when I do.

Don't get me wrong I think this thing can fall apart at any time now. I would not be long anything here. The boys say buy the dips and we are going to have a 3 to 5 % correction. Ususally they reinforce that first hit with a nice rally and tell you we needed that hit and everything is better now. That first hit does not normally go 3% it usually falls short of that.


The beat goes on...Mikey
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)