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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, April 28, 2010

Bernanke: US must cut Deficit...Really

DJIA 11058 +61.14 SPX 1192.10 +2.55 Nasdaq 2474.16 +2.70 VIX 21.10 -1.73 Gold 1168 +6.00 Silver 18.12 +.10 Oil 83.20 +.78
Dollar Index 82.56 +.125 EURO 1.3197 -.0012 Brit Pound 1.5196 -.0058
IEV(Europe Index) 36.70 -.21 EEM (Emerging Market Index) 41.87 +.36 EWZ (Brazil) 71.14 +1.09 FXI (China Index) 40.92 +.46
TLT (LT US Bonds) 90.58 -.9 IEF (7-10 yr US Bonds)89.91 -.58

Read my lips no new taxes. Remember those words out of the lips of George Bush Sr. Well now, Obama, who said no new taxes on those making less than 200,000, is saying that everything is on the table. The 12.9 trillion Nat'l debt is on track to nearly double over the next decade. It is expected to consume 90% of the GDP.

They think Greece and Portugal has a problem. Big Ben is saying we have to cut the deficit. We all know that Big Ben runs the country so lets cut the deficit. Thanks for the advice Ben, but what about the economy that is living off handouts now.

The government and the Federal reserve are winding down massive stimulus programs as the "economy recovers". How are we going to continue to "recover" when they both exit without sending us "back" into a recession. Meanwhile, the record 787 billion in Federal spending is peaking now and there is heavy opposition to more spending. The Budget deficit is almost 10% of GDP in fiscal 2009. The US economy faces almost unprecedented fiscal head winds over the next few years.

The stock market has rallied on all the liquidity that has been pumped in by the government and the Fed. The real economy as measure by employment, debt, and asset values that matters most, housing, have not budged after all of this direct intervention in the financial markets. The stock market is out on a limb and it is starting to act like the limb is bending.

Still no sell signal. A follow through from yesterdays sell off is still needed to seal the deal. Today's rally is the same thing we have seen for the past 50 days. Like I said yesterday one of these will keep going. More and more stocks are breaking down each day. The net sum is that the market uptrend is being pressured.

Today The Fed's description of the job market was somewhat brighter than after its last meeting in mid-March, when it said only that employment was stabilizing. It repeated that employers remained reluctant to add to payrolls. The Fed reiterated a closely watched statement that rates were likely to remain exceptionally low for an "extended period" because of low inflation and high unemployment. These are the folks that say we are in a recovery.

"Inflation is likely to be subdued for some time," the Fed said. Gold is rallying today on that statement. Gold remains in an uptrend but Gold is controlled and owned by the very governments that need cash. A source of funds???

A close below 1060 is still the number I am looking at. I am still negative on Gold but am not short on this uptrend. Remember the IMF is selling Gold.


Mikey
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