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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

Wednesday, February 24, 2010

Recovery news of the day..New Housing Sales at 302,000 Lowest on record

Sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery.

The Commerce Department said sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in January 1963, from an upwardly revised 348,000 in December.

It was the third straight month that new home sales fell and the percentage decline in January was the largest in a year. Analysts polled by Reuters had expected new home sales to increase to a 360,000 unit annual pace from December's previously reported 342,000 units.

Compared to January last year, sales fell 6.1 percent.

The drop in sales last month came despite the extension of a popular tax credit for first-time buyers, which was also expanded for repeat buyers.

The $8,000 tax credit and purchases of mortgage-related securities by the Federal Reserve have underpinned the housing market recovery from a three-year slump, which dragged the U.S. economy into its worst downturn since the 1930s.

The Fed's program ends next month, while the tax incentive runs out in June, leaving a potential void in the market.

Separate data from the Mortgage Bankers Association showed mortgage applications fell last week for a third straight week as demand home loans sank to the lowest level in 13 years. The association blamed bad weather for the slump in home loan demand. The Mortgage Bankers Association's index of mortgage applications, which includes both purchase and refinance loans, fell 8.5 percent in the week ended Feb. 19.

In a sign of possible renewed weakness in the housing market, Commerce Department report showed the median sale price for a new home fell 5.6 percent last month from December to $203,500, the lowest since December 2003. That monthly decline reversed December's gain.

Compared to January 2009, the median sale price fell 2.4 percent. The number of new homes on the market in January rose 0.4 percent to 234,000 units last month. January's poor sales pace left the supply of homes available for sale at 9.1 months' worth from 8.0 months in December.

All of this as Bernanke and the White House tout the recovery. The emperor has no clothes
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