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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, March 12, 2010

The longs are fat, dumb and happy....Ready for the slaughter

DJIA 10617 +6.13 SPX 1150.04 -.17 Russ2000 676.12 -1.19 NASDAQ 2366.96 -1.47 VIX 18.06

Dollar Index 79.81 Aussie .9166 Euro 1.3757 Brit Pound 1.5185
TLT(20yrGov Bonds)90.49 +.57 IEF (7-10Gov Bonds)90.15 +.15

XLK (Tech)22.76 XLE (Oil Index)58.44 -.02 XLF (Finan Index)15.62 +.03 KRE (Bank index) 40.13 +.26 XHB Homebuilders Index)16.80 -.07 GDX (Gold Miners Index)45.03 -.30XLB (BasicMatIndex) 33.38 +.22 XRT (Retail Index)40.13 +.26

EEM(Emerging Markets) 41.38 -.13 FXI(China Index)41.14 -.16 IEV(Europe350)38.25 +.16 (Brazil)73.76

DBC (Commodity Index) 23.47 -.19 Gold 1101.7 -6.50 Silver 17.03 -.13 Copper 3.38+ .007 Oil 81.08 -1.03 RBOB (Whsl Gas)2.24 -.02 Nat Gas 4.40 -.04


Ding Dong the Wicked old witch is dead or so say the longs. Hip Hip Hurray the recovery is here and the bull market is resuming the uptrend. The shorts are admitting defeat and running to the sidelines. The Cramers of the world are telling you that they were right and the bears are back in hibernation.

This is exactly what we need for a sustainable sell off. The bulls are so convinced that they are right that they will yell buy the pullback on the next sell off. The market is bullet proof it is immune from the bad jobs numbers and the weak balance sheet of the consumer. They will say that the lesson of the last sell off is, don't panic and if you can't handle it then don't play.

The stage is set I will go with the weakness.

Mikey
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