Posting Times

Posts will be between 8:30 PM to 10:00 PM PST
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 16, 2010

Short area at 10500

Here is a 3 month chart of the DJIA the break came on 1/21 the day before options expiration. The 50 day average was broken on that day and that is when the "boys" started to buy stock and the shorters came in. The game is to make those sellers a loser. In most of these charts the price retraces to the beginning of the sell off. You can see that there were clear tops at 10550 in November and December and a "breakout" in early January.

The shorters were looking for a reversal of price below that breakout at 10500 but probably were convinced at 10200. I think a rally above the 50 day, now at 10390 and into the 10500 will run the shorts. I will short any weakness from that point.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)