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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, September 28, 2009

Stocks up on M&A activity..or If you run out of Good reasons to mark up stocks...MAKE ONE UP!

DJIA 9810 +145 SPX 1042 1063 +19.20 VIX 25.05 -.56 Gold 994.30 +3.30 Silver 16.23 +.17 RBOB (Whsl Gasoline)1.64 +.02 Dollar Index 77.10 +.085 EURO 1.4622 -.0004(Long Term Gov Bonds)98.50 +.52 IEF (7-10 Yr Gov Bonds)92.19 +.08 XLK (Tech)21.01 +.43 XLE (Oil Index)54.42 +.86 XLF (Financials Index)14.93 +.34 XHB (Homebuilders Index)15.10 +.21 EEM (Emerging Markets)38.72 +.63 FXI (China Index)41.51 +.28 GDX (Gold Miners Index)43.68 +.63


In this game of deception where the economy is deteriorating the rapidly they are pulling out the buyout card. This move is intended to misdirect the attention of the players from the economy to price action created by "M & A activity. I have to admit I never see this one coming because I am always so focused on the economy that I don't even consider it.

These deals signal a top because they want to make one last push to get everyone back into the market. It makes the market all about price and trades come quick and easy. It also plants the seed in the shorts head that they can come and get him anytime they want.

The bonds are continuing to move higher as attention is misdirected into the hot market, The TLT hit a 5 month high today at 98.66. The corporate and municipal bond markets are back to premarket breakdowns which shows that the fear that was created by the Lehman meltdown is gone.


What is happening is that investors are tired of making nothing in the bank and they are buying bonds of all kinds. I was in the bank last week and I overheard a financial planner talking to people about bond funds. He was telling them that the way the managers structuring the length of the maturities of the bonds. What he did not tell them was that the risk is in the principal and not the maturity date.

Those people had probably come into the bank to rollover a CD and when they balked at the rate the bank was giving the nice little teller told them that the financial planner could give them some higher yielding alternatives. Of course these alternatives will cost them a lot of money when the next crunch comes.

The next crunch is coming because I can see the little people moving now. The game of deception is working as it always does and the system will benefit from it. The system is good at not only creating messes but cleaning them up because there is a lot of money to be made by unscrupulous opportunists that take advantage of hard working people that don't understand what is going on.

All across the country there are many people going into banks and telling their tellers that they can't live on the meager interest rates the banks are giving. Everyone of those tellers are referring the customers to the financial planners that will "help" them make a better return on their money.

I saw a bit on CNBC where the question was asked what is the better investment OIL or Gold. It was a forgone conclusion that they were both good investments and the question was not asked IF either one was good. That tells me something because there is no longer an argument about weather either one is going up. In the sceme of things that message is a statement that they believe that their message is fully accepted.

I expect the market to beat me up for a while for shorting last week but that is part of the game. The hand is set and this action is just one more nail in their coffin.

The beat goes on....Mikey
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