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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

Friday, November 13, 2009

Putting lipstick on a Pig

JC Penny, (JCP) 31.24 +1.85, reported earnings today. Sales fell to 4.18 billion from 4.3 billion. Earning fell from .56 a share to .11 a share. Same store sales fell 7 to 7.5%.
Bad ...Nah, why, because they expected worse than that and guess what they say next year looks much better.

I saw the same reports coming out of the housing industry in early 2006. They told us that their outlook for 2006 & 2007 was better. A lie but this was used to prop up the stocks in early 2006. Same old tired game.

Mikey
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