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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

Friday, June 25, 2010

That was the week that was (TW3)

Monday 6/22/10 DJIA 10442.41 -8.23 10 year note 3.25% 1240.70-17.60 Dollar Index 86.23 +.26 Oil 77.82 +.64

China allows Yuan to rise against the dollar. The market rallies and then fades.
More than 1/3 of the borrowers in the loan modification program drop out.

Tuesday 6/23 DJIA 10293.52 -148.89 10 Year Note 3.17% Gold 1240.80 +.10 Dollar Index 86.40 +.17 Oil 77.21 -.61
Home resales fall in May by 2.2% to 5.5 million annual rate.

75% of the banks have repaid TARP money causing Geithner to call the program a success. The US earned 21 billion in profits.

UK unveils austerity budget and raises value added tax and increases capital gains tax to 28% from 18%. Big banks will also be taxed.

Wednesday 6/24 DJIA 10152.80 -145.64 10 year note 3.13% Gold 1234.80 -6.00 Dollar Index 86.04 -.36 Oil 76.35 -1.50
Oracle beats Q4 EPS by 40%. 30 year Mortgage rates fall to record lows at 4.69%.
Durable Goods rose .9%

Thursday 6/25 DJIA 10298.44 +4.92 10 year note 3.11% Gold 1245.50 +1.40 Dollar Index 86.01 -.03 Oil 78.06 +2.35
New home sales at record low sales plunge 32% in May as tax credits expire. Medium price of homes fell 1% to 200,900.

Obama sacks US commander McCrystal

14,100 filers wrongly received housing tax credits including 1300 prisoners.

Friday 6/26 DJIA 10143.81 -8.99 10 year note 3.11% Gold 1256.70 +10.30 Dollar Index 85.57 -.44 Oil 78.06 +2.35
Financial reform bill deal reached. Biggest since great depression. Should raise costs to banks and borrowers. will add 20 billion in taxes on banks and hedge funds. Derivatives that are related to equities, commodities and credit default swaps that are not investment grade will have to be held in a capitalized subsidiary.

Consumer confidence hit a 29 month high with the University of Michigan index rising to 76 highest since Jan of 2008.


Notice the 10 year note falling from 3.28% on Monday to 3.11% on Friday. The news which was bad all week ended with the rather comical rise in the consumer confidence survey that ended in a 29 month high. Interest rates are falling and in a hurry and the stock market is fading. The economic news is bad but the recovery hype is keeping the public optimistic. Mortgage rates hit a 30 year low and that means something. It means that the economy is in bad shape. I continue to like the short side of this market.

Mikey
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