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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, April 26, 2010

DJIA 11205 +.75 SPX 1212 -5.23 Russ2000 738.86 -3.06 NASDAQ 2522-7.20 VIX 17.47 +.85

Dollar Index 81.45 -1.65 Aussie .93 +.011 Euro1.3377 +.0032

TLT(20yrGov Bonds)90.11 +.006 IEF (7-10Gov Bonds)89.64 +.06

XLK (Tech)24.06 -.02 XLE (Oil Index)61.95 -.14 XLF (Finan Index)16.50 -.28 KRE (Regional Bank index) 28.50 -1.20 XHB Homebuilders Index)19.55 -.09 GDX (Gold Miners Index)48.14 -.07 XLB (BasicMatIndex) 35.12 +.11 XRT (Retail Index 48.40 +.28

EEM(Emerging Markets) 43.03 -.03 FXI(China Index)41.94 -.11 IEV(Europe350)38.63 -.06 (Brazil)73.56 -.07

DBC (Commodity Index)24.35 -.12 Gold 1156.80 +2.80 Silver 18.33 -.20 Copper 3.51 -0.10 Oil 83.92 -.28 RBOB (Whsl Gas)2.34 +.0016 Nat Gas 4.21 -.046



The market has been rallying as studly as a Madoff trading account since Feb 5th. Nary a pullback to shake the bulls. This rally has lasted 12 weeks and is 6 weeks past its breakout of 10732. Meanwhile we are way overbought and at bullish extremes for the market indicators. They are extreme enough to produce a very nasty top. I still have no sell signal. My Parabolic gives me a sell at 11016 which is also the 20day average. The 50 day is at 10732 which was the breakout number on March 17. Shorting here is a no brainer but I will wait for a break. Notice that the MACD is still above the zero line and, therefore, the market is in an uptrend. Uptrends can end in a hurry from this type of extended formation. A break of the zero line would be a top I would chase

Market Indicators:








Ratio of Premiums Puts/Calls .64 High 2.58 low .34
Mutial Fund Purchase/Redemptions 1.23 High 1.50 Low .66
Price to Book DJIA 4.09 High 4.42 Low 1.27
Divident Yield 2.51 High 4.45 Low 2.12
Nasdaq Trading Vol vs NYSE 190 High 290 low 79
Accumulation/Distribution A Accumulation E Distribution
NYSE E
DJIA C-
S&P 500 D
Nasdaq B-

All indicators are at bullish extremes

Mikey
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