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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, February 26, 2010

Nucor CEO Dimicco ..." Economy stinks"

DJIA 10339.39 +18.90 SPX 1105.49 +2.55 Russ2000 629.99 -.47 NASDAQ 2239.09 +4.87 VIX 19.44 -.66 Oil VIX 32.80

Dollar Index 80.39 -.44 Aussie Dollar(FXA) 89.56 EURO(FXE)1.36 31

TLT(20yrGov Bonds) 91.72 +.72 IEF (7-10Gov Bonds)90.87 +.31

XLK (Tech)21.70 +.04 XLE (Oil Index)56.09 +.08 XLF (Finan Index)14.70 +.11 XHB Homebuilders Index)15.81 +.09 GDX (Gold Miners Index)43.83 +.38 XLB (BasicMatIndex) 31.54 +.04

EEM(Emerging Markets) 38.87 +.30 FXI(China Index) 39.58 +.59 IEV(Europe350)36.10 +.26(Brazil)68.36 +.86

Gold 1118.30 +9.90 Silver 16.115 +.005 Copper 3.2265 +.0165 Oil79.74 +1.57 RBOB (Whsl Gas)2.0670 +.03 Nat Gas4.81 +.041

In an interview on CNBC fast money Nucor CEO and straight shooter Dan Dimicco said today that "we are in a rough economy, and its not a pretty picture out there. The economy stinks and we are not doing enough things to get it turned around, We are fiddling while Rome is burning and I hope the American people get folks shaked up. We have alot of work to do and we are not doing the right things yet."

Mellisa Wade told Dimicco that Commercial Metals CMC 17.73 was mentioned as a buy out target and that NUE name came up as a possible suitor for this company. She asked him if this was the sort of company he would like to buy? He replied "our policy Mellisa is not to comment on false rumors I should say our policy is not to comment on rumors(smiling)and we don't and we won't and we will leave it at that."

That is the kind of guy I would invest in but NUE is in the wrong business for the economy as it is now. If you believe that the economy is turning around buy this stock I just do not share that opinion.


The chart looks ugly here




Commercial Metals CMC..When a buyout rumor (2/22) hits that is not a good thing longer term
Here is the story and the chart:

NEW YORK (Dow Jones)--Commercial Metals Co. (CMC) shares shot higher Monday as the market returned to a rumor long propagated that the metal scrapping company would be the target of a takeover by a steel giant.

Shares of Commercial Metals rose 12% to $16.87 in recent trading, earlier hitting a high of $17.20, its highest point in more than a month. Nearly 6 million shares had changed hands Monday, or about three times the typical amount.

Meanwhile, options traders appeared to be actively speculating as well. In particular, they gravitated to near-term March $17.50 calls, which convey the right to buy the stock. At a premium of 70 cents, Commercial Metals would need to top $18.20 before the contracts' expiration on March 19 for the holders to make money.

Market chatter across the Internet and investing world appeared to be spreading the idea that U.S. steel giant Nucor Corp. (NUE) was looking to purchase Commercial Metals.

An analyst called that rumor "bogus" and noted it often makes the rounds on the rumor mill simply because the companies do have some overlap and it could potentially make sense.

Representatives from Nucor and Commercial Metals were unavailable for immediate comment.

CMC chart similar to NUE.. I would like to short this one if the rumor picks up again near the 18.75 area



Trading notes:
The VIX 19.44 is falling toward the low of its trading range of 17 indication that fear is leaving the market. I am starting to hear the correction talk fade.
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