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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

Thursday, March 18, 2010

Jobless claims tell the story

The number of Americans filing continuing claims for unemployment insurance spiked last week, the Labor Department said Thursday, as sluggish hiring continues to drag on the labor market's recovery.

The number of people filing continuing claims jumped to 4,558,000 in the week ended Feb. 27, the most recent data available. That was up 37,000 from the preceding week's upwardly revised 4,521,000 claims.

Economists were expecting continuing claims to remain unchanged at 4,500,000.

Continuing claims reflect people filing each week after their initial benefit week until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved into state or federal extensions, or people whose benefits have expired.

"Continuing claims represent the pool of workers who have been unable to get back into the labor market quickly," said Robert Dye, senior economist at PNC Financial Services Group. "Long-term unemployment remains a significant problem and will remain a drag on the economy, as it has for some time now."

Dye said the reluctance of small businesses to commit to hiring adds substantial pressure to a jobs recovery.

"The climate for hiring is highly uncertain at small businesses, with health care legislation still pending and tax policies in flux," he said. "I think it will take months before we see hiring there."

Wells Fargo senior economist Mark Vitner added that the sharp increase in continuing claims in the latest data could also be because severe winter weather hindered employers from hiring.

Jobs bill OK'd by Senate
Last week, lawmakers pushed the deadline to apply for unemployment claims to April 5, but the Senate approved a measure Wednesday to extend the deadline until year-end. The bill has moved to the House for approval.

There were 462,000 initial claims filed in the week ended March 6, down 6,000 from the previous week's downwardly revised 468,000, A consensus estimate of economists surveyed by Briefing.com expected claims to drop to 460,000.

The 4-week moving average of initial claims, which levels out volatility, was 475,500, up 5,000 from the previous week's downwardly revised average of 470,500.

"Initial claims are improving, but they are stalling at the current level and are still too high to create sustained job growth," Vitner said. "In a healthy economy that is functioning normally, jobless claims need to come to closer to 350,000."

What this means is that the layoffs are stopping but there is no hiring. The market is ignoring this information.
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