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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

Thursday, April 15, 2010

The message from the PIMPS

DJIA 11188 +15.26 SPX 1212.19 +1.54 Russ2000 723.69 +1.29 NASDAQ 2514.82 +10.11 VIX 15.84 +.25

Dollar Index 80.64 +.35 Aussie ..9342 -.02 Euro 1.3558 TLT(20yrGov Bonds)89.33 +.22 IEF (7-10Gov Bonds)89.42 +.18

$XAL (airline index) 40.57 +.47 XLK (Tech)24.03 +.08 XLE (Oil Index)60.36 +.03 XLF (Finan Index)17.04 0 KRE (Regional Bank index) 28.43 +.11 XHB Homebuilders Index)18.125 -.19 GDX (Gold Miners Index)47.85 -.50 XLB (BasicMatIndex)34.97 +.04 XRT (Retail Index 43.94 +.13 IYR (Real Estate index)51.73 +.94

EEM(Emerging Markets) 43.83 +.14 FXI(China Index)44.02 -.26 IEV(Europe350)89.42 +.18 (Brazil)75.57 -.19

DBC (Commodity Index)24.64 +.03 Gold 1160 +1.10 Silver18.43 +.186 Copper 3.60 -.85 RBOB (Whsl Gas2.32 -.001 Nat Gas 3.99 -.21

Sentiment Indicators frome 4/13 All are flashing warrning signs

Bulls 51.1% Bears 18.9%
Bull/Bear Spread 32.2
Bull Bear Ratio 2.70
Put/Call .52
Vix 15.84

The message I am hearing over and over now on CNBC by all the Feds pimps is that it would be crazy to short such a strong market. The price action is what is is all about now. That is all you have to know. I am hearing don't fight the FED and the tape. It is amusing to me that they have to use this mantra because NO ONE is shorting this market now. Everyday there is a story saying that no correction is in sight and we are going to DJIA 12000.

Big Ben has testified that the economy is improving and that along with guys like Larry (mama's boy) Kudlow singing the praises of a V recovery and the Fed driving the market higher everyday is enough to convince anyone.

The market is ripe for a hit. I still believe that we are going to take out the March 2009 lows of 6600. I will chase the first sell off. My sell signal is 10895 for the DJIA and 1184 for the S&P. I have taken AAPL off of my short list but will short at 239.

Mikey
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