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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, April 16, 2010

Goldman news could be a big game changer

DJIA 11000 -145 SPX 1190.52 -21.29 Russ2000 712.67 -11.58 NASDAQ 2476.79 -39.19 VIX 19.35 +3.46

Dollar Index 80.98 +.40 Aussie .9272 -.008 Euro 1.3498 -.007 TLT(20yrGov Bonds)89.77 +.56 IEF (7-10Gov Bonds)89.84 +.45

$XAL (airline index) 39.39 -1.19 XLK (Tech)23.71 -.34 XLE (Oil Index)59.31 -1.01 XLF (Finan Index)16.40 -.58 KRE (Regional Bank index) 27.56 -.84 XHB Homebuilders Index)17.76 -.36 GDX (Gold Miners Index)46.28 -1.29 XLB (BasicMatIndex)34.20 -.72 XRT (Retail Index) 43.25 -.69 IYR (Real Estate index)50.76-.60

EEM(Emerging Markets) 42.54 -1.21 FXI(China Index)42.28 -1.62 IEV(Europe350)38.97 -.80 (Brazil)73.50 -1.46

DBC (Commodity Index)24.20 -.50 Gold 1133 -27.30 Silver 127.69 -.73 Copper 3.50 -.09 RBOB (Whsl Gas)2.25 -.07 Nat Gas 4.05 +.07

Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.

The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.

Goldman is the big Ragu on Wall Street. They do the deals and pull the strings for the boys. The most important thing for an IB firm is its reputation. We'll see if a big name comes to calm the waters if not this could cause havoc in the markets. These guys have their hands on EVERYTHING. The market is way overbought this could spread. By the way this is options expiration day and there may be alot of unwinding to do.

I want to make it clear that this news is an excuse to take the market down THE REAL REASON IS THAT THE ECONOMY IS GOING INTO THE TANK. They will blame it on Goldman but like they say "its the economy stupid."

This may be just a trial baloon. They are testing the waters to see if the shorts come at them here. If they do we go back up. The DJIA is sitting on 11000 still no sell signal yet but a follow through below 10700 would get me short, we'll see.

Mikey
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