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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, December 8, 2009

This says it all

DJIA 10322 -68 SPX 1096 -6.30 VIX 22.88 +.78 Gold 1150 -13.70 Silver 17.85 -.481 Oil 72.73 -1.20 RBOB (Whsl Gasoline)1.9127 -.0279 Dollar Index 76.16 +.355 EURO 1.4733 -.0087 TLT (Long Term Gov Bonds)93.77 +.31 IEF (7-10 Yr Gov Bonds)91.63 +.34 XLK (Tech)22.12 -.06 XLE(Oil Index)55.04 -.72 (XLF Financials Index)14.29 -.099 XHB (Homebuilders Index)14.49 -.03 EEM (Emerging Markets)40.93 -.54 FXI (China Index)43.93 -.71 GDX (Gold Miners Index)48.67 -1.09


Government 'Out of Bullets,' Consumers in Trouble: Whitney
The government is running out of ways to help the economy as the US faces major issues regarding credit and employment ahead, banking analyst Meredith Whitney told CNBC.

"I think they're out of bullets," Whitney said in an interview during which she reinforced remarks she made last month indicating she is strongly pessimistic about the prospects for recovery.

Primary among her concerns is the lack of credit access for consumers who she said are "getting kicked out of the financial system." She said that will be the prevailing trend in 2010.

Despite being able to borrow at near-zero percent interest, banks are not taking that money and putting it back into the marketplace. The Federal Reserve said Monday that consumer lending dropped 1.7 percent on an annualized basis in October, the ninth straight monthly decline.


With consumer spending making up about 70 percent of gross domestic product, the inability of even credit-worthy consumers being able to be able to borrow could put a severe crimp in future growth.

"What's so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit," Whitney said.

"You're going to get a situation where you revert from a consumer standpoint," she added, "where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders."

The problems taken together also will pose difficulties for investors.

"I have 100 percent conviction that the consumer is not getting any better and there's not more liquidity," Whitney said. "So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure."

The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.

"I don't think you can cut taxes enough to stimulate demand," Whitney said. "For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it's a real issue. You can't get around it. This has never happened before in this country."

Noteable:

XLE (oil Index) 55.08 off high 60.56 on 10/21 Down 10%
GDX Gold Index 48.67 off high of 55.40 on 12/2 Down 12%
FXE (Euro) 147.20 off high of 151.27 on 11/25 Down 3%
Dollar Index 76.04 off lows of 74.22 of 11/25 on downtrend line drawn through March and April highs.

Conclusion: A trade above 77 on Dollar Index should be the end of the "Risk" trade.

Only sell signal is in Oil and Oil Index ...Gold stocks have reversed most recent break out

Shorted EWZ again @ 78.25 yesterday
10200 remains my sell signal on the DJIA

Mikey
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