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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, November 24, 2009

The Buffet/Gates Card...The Coupe de grace for the Shorts!!!

The expression coup de grâce (pronounced /ˌkuːdə ˈɡrɑːs/; French: [kudəɡʁas], "blow of mercy") means a death blow intended to end the suffering of a wounded ...That is what the Buffett buyout is intended to do to the shorts.

Take a look at the charts at the beginning of November. The market is rolling over the fundamentals are screamimg sell and the transportation average is breaking down. This average is a very good indicator of economic health. It is becoming obvious that the economy has had it. You can see it everywhere. Not only was it obvious as you walk the streets but you could see many stocks starting to break including the Rails,.airlines and truckers. Yellow freight stock was breaking into the 1's.

This is where I started to add on to my shorts. I believe I had a lot of company too. The trade looked obvious. The shorts were coming to the party then the Wizard played the Buffett/Gates card. They told everyone that they were buying and the stock market took off. How could you not believe everything is going to be OK when Buffett buys BNI for billions. Hey, he looks like such a kindly old man.

First of all he is the WIZARD OF OMAHA and why would he spend that kind of money if he didn't know something. I will not lead you to a conclusion you cannot see for yourself. Most will argue with the intent of this article. But if you are to be a successful investor you need to consider this. Let's just say that that event makes the shorts think that the Wizard can pull this out of his butt anytime he wants and he can!

That is what makes this game so tough. I have learned that there is always some kind of event that occurs after you are sure it is over that makes you question your position. But again remember this, in the end the economy DOES MATTER. That is what you have to focus on. Everything in between is just the Wizard doing his thing to get you to believe that what you see is not real.

This time it is the Buffett/Gates card. You may choose to believe this or not but I am going to write it for your consideration.

My sell signals are a close below 10200 on DJIA and 1087 on the SPX. Those were the closes on the day Buffett and Gates were interviewed by CNBC by Becky Quick. It will also be the fifth head fake we will have had since August when the real economy topped.

No add on's today.

Mikey (The Idiot)...suffers on......until I don't
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