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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

Tuesday, June 8, 2010

Don't rule out a rally from here

DJIA9938 +122.97 SPX 1062.02 +11.55 Nasdaq 21.70 -3.33 VIX 33.67 -2.90 Gold 1237 -3.50 Silver18.25 +.09 Oil 72.03 +.59 RBOB(retail gas)1.989 -.0056 Nat Gas 4.79 -.11 DBC (Commodities)21.46 +.17 EURO 1.1952 +.0028 Dollar Index 88.37 -.09

We are at the low end of a trading range and the VIX is high and the mood short term is negative. This sets up for that rally I expected in June to tell everyone that Europe is going to be OK and this sell off was just a bad dream. Gold would be a loser in this scenario.

Besides Ben says:Federal Reserve Chairman Ben Bernanke said he doesn't expect the economy to slide back into recession. Now we would not want to disappoint Ben.

The public is also starting to get ready to sell so now would be a good time for them to take off the edge a little. Why? Because they(the boys) don't want to buy the stock now. So I expect a rally soon plus as an added bonus it would wipe out the June put players. June options expire on the 18th.

Mikey

Note: AAPL 249.06 was down today and closed below 250. This is a sell to me here. I think this one goes down even in a market rally. That also goes for all of the prior high flyers like BIDU CRM ESRX and CMG NFLX and DECK
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