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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

Saturday, May 1, 2010

The boys play the Buffett card.

When all else fails play the Buffett card. That will be a good excuse to rally the market on Monday. They will use this to get prices up because this market is the Titanic and Buffett is the captain of an unsinkable ship. The problem is with the cheap rivets they used during construction.

Warren Buffett Defends Goldman Sachs At Berkshire Shareholders Meeting

Warren Buffett spoke to reporters Saturday morning in Omaha before his annual meeting with Berkshire Hathaway shareholders

Warren Buffett is defending Goldman Sachs before shareholders at the Berkshire Hathaway annual meeting in Omaha, saying, "It's hard for me to get terribly sympathetic" with the alleged victim in the SEC's case against the Wall Street giant.

He began his marathon 5-hour (excluding lunch break) question-and-answer session with a lengthy explanation of the Goldman transaction at the center of the SEC's fraud allegations against the firm, using a Berkshire deal involving Lehman as an example.

While he concedes the SEC's accusations have "hurt" Goldman's reputation, he does not "hold against Goldman" the fact that it has been sued by the SEC. The Justice Department has also opened a criminal inquiry into Goldman's trading. Mikey thinks they should invetigate Buffett and Cramers trading activites.

Buffett says it shouldn't matter who is on the other side of a deal, and adds it's "hard for me to get terribly sympathetic" for ABN Amro, the firm identified by the SEC as the victim in the Goldman case.

Asked whether the controversy will affect Berkshire's investment in Goldman, he replies that ironically it is helping, because it makes it less likely Goldman will completely pay off the loan, a move that would cut off the stream of large dividend payments Berkshire is getting. "We love the investment."

Berkshire loaned $5 billion to Goldman in September of 2008 and receives a dividend of 10 percent a year. Berkshire also got warrants to buy Goldman shares at $115 each. Their value fluctuates with Goldman's common stock price. The loan dividends are not affected by the stock price.

Buffett does say he might change his mind about Goldman if the SEC charges "lead to something more serious."

Buffett also says the economy has shown significant improvement starting in March, with Berkshire companies "picking up steam."
He's also given a preview of next Friday's first quarter earnings release. Berkshire expects Q1 earnings of $3.633 billion, reversing last year's $1.5 billion Q1 loss, and operating earnings of $2.222 billion.

The company racked up $1.411 billion in investment and derivative gains in the quarter.

And he repeats his belief that investors shouldn't focus on quarterly earnings.

You wouldn't think that just because the kindly old gentleman invested 5 billion in GS would have anything to do with his opinion? Nah...I sincerely hope that Buffett gets his chance to buy GS at 115 because he deserves it. By the way remember all the choo choos he bought and the GE with the preferred? That stuff wouldn't go bad either would it? Nah...Well stay tuned because I think this thing will get ugly.

By the way, the Goldman problem and the Greece problem won't be the reason this thing goes down. It is the bad economy but that will surface later on down the road.
Mikey
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