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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

Wednesday, July 7, 2010

Here come the Putbusters

DJIA 9921 +178 10yr note 2.9696 +.039 Oil 74.04 +2.06 Gold 1201.30 +6.40
Dollar 84.04 -.26

So you thought you could get rich this month on the bad news. Well don't forget the options expiration on July 16. Yes, that's right here come the put busters. I am sure that one companies earnings is going to prove to the world that the economy is improving or the earnings are hanging tough even with the bad economy. That is life in the market.

I don't consider this rally any more than what it is an option dump. The news was way bad last week and it is real but anything can happen in a 2 week period. If it doesn't just make something up.

Mikey
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