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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, May 6, 2010

DJIA bounces off 200 day in a one day sell off

I thought we would go to the 200 day but I thought it would take more than one day. The DJIA was down nearly 1000 points inter day today before bouncing and as I write this we are down a paltry 400 points at 10470. I know for a fact that the shorts are covering and the longs are buying "cheap" now. Remember buy the pullback. The only problem is that this is the BEGINNING of the sell off and not the end. I did not sell any of my positions on the hit I will add to my shorts on rallies. I don't think we rally too much from here but that does not matter.

This is the beginning of the sell off and not the end. What they are going to tell us now is that they have the problem contained in Europe and our economy is OK and everything will be OK. Okey Dokey. Just like every thing was OK when sub prime started to blow in early 2007. Same old guys same old tired lies. I really don't think this rally goes too far. The shorts missed this one and want to see 10800 before they short. The longs had buy orders waiting under the market get filled and the shorts that were in covered.


The market ONLY closed down 347 at 10549. It amazing that a decline of 347 feels so good. That is the WIZARD at work.
Mikey
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