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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, February 2, 2010

The Volker Rule ...

DJIA 10284 +99.85 SPX 1101 +11.86 Russell 2000 612.46 +3.24 VIX 21.21 +1.38 Gold 1117 +13.20 Silver 16.73 +.07 Oil 76.95 +2.52 RBOB (Whsl Gasoline)2.008 +.0759 Dollar Index 79.15 -.265 EURO1.3942 +.0037 TLT(Long Term Gov Bonds 91.25 0 IEF (7-10Yr Gov Bonds)90.19 +.10 XLK (Tech)21.39 +.19 XLE(Oil Index)56.93 +.63 XLF (Financials Index)14.52 +.10 XHB (Homebuilders Index)15.85 +.69 EEM (Emerging Markets)39.53 +.22 FXI (China Index)39.77 +.22 GDX (Gold Miners Index)43.17+.23 XLB (Basic Materials Index) 31.44 +.10


White House economics adviser Paul Volcker will urge Congress Tuesday to rein in risky investing by big banks to help prevent them becoming "too big to fail," according to testimony obtained by Reuters.

The former Federal Reserve chairman, whose star is rising in the Obama administration as it pushes harder for Wall Street reform, will face questions at a Senate hearing from lawmakers seeking details on last month's proposed "Volcker rule."

President Barack Obama stunned financial markets in late January by calling for new limits on banks' ability to do "proprietary trading," or buying and selling of investments for their own accounts unrelated to customers.

Since then analysts have speculated widely about exactly what sort of activities would be off-limits if Congress adds the proposal, formulated by Volcker, to a sweeping package of financial regulatory changes still being debated.

Volcker, a monetary policy sage whose tight-money regime broke the back of stagflation when he was Fed chairman in the early 1980s, will tell the Senate Banking Committee that there is little reason for uncertainty about what he is proposing.

"Every banker I speak with knows very well what 'proprietary trading' means and implies," Volcker will tell the committee, according to the written testimony.

"My understanding is that only a handful of large commercial —maybe four or five in the United States and perhaps a couple of dozen worldwide — are now engaged in this activity in volume," he will say.

"In the past, they have sometimes explicitly labeled a trading affiliate or division as 'proprietary,' with the connotation that the activity is, or should be, insulated from customer relations."

Hedge Fund Ties Targeted

In addition, Volcker wants banks to sever their ties to hedge funds and private equity ventures.

"Hedge funds, private equity funds, and trading activities unrelated to customer needs ... should stand on their own, without the subsidies implied by public support for depository institutions," he will say at the afternoon hearing.

Left largely unaddressed in the testimony is a third proposal — limiting the future growth of large financial institutions. Obama in January called for a new market share cap for banks that takes into account not only their deposits, as currently limited, but also non-deposit funding.

In addition, no explicit mention is made in the testimony of an idea associated with Volcker that he has lately been soft-pedaling — reimposing the 1930s-era Glass-Steagall laws that required separation of commercial and investment banking.


"I am not so naive as to think that all potential conflicts can or should be expunged from banking or other businesses," Volcker said in his prepared remarks.

"But neither am I so naive as to think that, even with the best efforts of boards and management, so-called Chinese walls can remain impermeable against the pressures to seek maximum profit and personal remuneration," he said.

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Meaning that the banks are giving money to traders and are trying to earn their way out of the mess they created. The money is not going into the economy it is going into their pockets. That is the reason for such a large disconnect between the stock market and the economy. The whole thing is being back by the "too big to fail" rule and Volker is addressing that with his testimony. In other words, he is saying this thing is going to get out of hand and we are going to do something if you you don't rein it in.


Rally today is pushing toward the 50 day of 10432. Employment numbers Friday will be interesting.

Mikey
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