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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

Monday, March 8, 2010

Turning the Screws

DOW 10552.52-13.68-0.13% S&P 1138.50-0.20-0.02% NAS 2332.215.86+0.25%
VIX17.790.37+2.12%

TLT(20yrGov Bonds)89.90 -.47 IEF (7-10Gov Bonds)90 -.24

Industry Groups
XLK (Tech)22.42 +.11 XLE (Oil Index)58.06 -.09 XLF (Finan Index)15.22 unch XHB Homebuilders Index)16.87 +.30 GDX (Gold Miners Index)46 -.43 XLB (BasicMatIndex) 33.17 unch XRT (Retail Index)39.61 +.27

Foreign Markets
EEM(Emerging Markets) 40.98 +.03 FXI(China Index) 41.25 +.07 IEV(Europe350)37.69 +.27EWZ (Brazil)71.67 -.53


COMMODITIES

OIL 81.49-0.38-0.46%
GAS 2.2752-0.014-0.61%
NG 4.5790.052+1.15%
Gold 1122.9-1.10-0.1%
SILVER 1722.0-5.20-0.3%

CURRENCIES
Euro 1.3623-0.0004-0.03%
Yen 90.14-0.12-0.13%
Pound 1.5033-0.0032-0.21%
Aussie Dollar 90.9 .0005
Dollar Index 80.48 +.02

The market is hanging around just under the recovery highs and above last weeks break out at 1125 S&P. I see big names like BA, MCD, V, AAPL are making runs at or taking out their most recent highs. I am hearing them tout the techs so I would think that is the next group to "breakout".

This is to the point where the players have to make a decision. The longs don't want to miss any move up and the shorts are ready to jump ship and try again later. The shorts I know are getting margin calls and they usually give then 5 to 7 days to suffer. To the longs this looks like easy money to the upside.

I have said that a close below 103i4 puts me short. I also know that taking out the highs is a. possibility. I prefer the later because the stock would change hands and then a reversal from that spike would be a sitting duck. I think 11000 can happen and would not rule it out. That would be a dagger to the shorts and their argument would be lost.

The fundamentals are bad beyond belief. The presentation is now complete about the "recovery" if we get one more convincing spike that should seal the deal. I believe the Fed is exiting the market on this move. The players are getting the easy money trade as a reward from the Fed.


I notice they are saying it is a good thing that the dollar is moving up with the market. Who said you can't have it both ways? I see some weakness in Gold today and think the commodities are still the best shorts. Gold has been the leader of the pact so let's keep a watch on that to see if it peels over as the market "breaks out"
The price to watch is below 1060. If it does that I think that game is over. I know I have been saying that for 6 months but that is the number I am watching.

I think we are in a good shorting area but will wait to see what they have up their sleeve.


Mikey
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