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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, July 22, 2010

Market Surges on earnings news

DJIA10323 +202.68 VIX 24.33 -1.31 10 year2.9335 -1.31 30 year 3.931 +.0389 Gold 1196 +3.90 Oil 78.70 +2.14 USD 82.75 -.843
Mikey OB/OS index (80=OB 20=OS) 63

The gamekeeper is playing the good earnings and better outlook card today. The DJIA is up 200 points on earnings news. Of course these earnings and outlooks are much better than originally forecasted. The outlook by almost every corporation is very up beat. I guess they see more stimulus money coming from Uncle Sugar.

Today is telling us that things are great and if you don't believe it look at this great rally. The financial recovery continues and the gap between this and the real economy widens. Like I said the if you can't make money in the economy where do you go. The casino, of course. They are telling you today to come to the casino and make money. Listen to Cramer on CNBC he is working hard for the casino today. Today's market is saying come and play, that is what today is all about.

This so reminds me of 2008 when the economy was heading south but earnings were great and according to Bernanke the economy was not going into a recession. I remember George Bush standing on the White house lawn and talking about the strong economy, remember? His economic advisor was, of course, Ben Bernanke. The market was making new highs and real estate was tanking and no one could get a loan. The subprime lenders were going under but they told us that the big banks were not going to be hurt by the problem.

What is happening now? The earnings are great and the economy is sinking. Real Estate is dropping again and the banks are making record earnings as the foreclosure rate increases. GM is talking about making subprime loans to boost car sales and Bernanke says there is no double dip in sight.

He says the Fed is going to see to it that that does not happen by keeping rates low. He wants Congress to provide more stimulus to the economy. Maybe so the stock market can keep the corporations in cash. Employment rates that they say are at 9% are really at 22% and the Congress is going to pass a law extending unemployment benefits. This produces nothing it only launders money from the treasury into the economy without any real production.

The government and the bankers and the investment analysts are on the take. They have a vested interest in keeping the scam going for as long as they can. The investment bankers are banks now as Glass Segall is dead. They have permanently raised the FDIC insurance to 250K so that the treasury is backing this at an increased level. Those are the people that are benefiting from the "recovery" not the public.

Like I said this is a financial recovery and not an economic recovery. Financial recoveries are alot of hot air without an underlying economy. Just like 2008 the day of reckoning will come when they can no long pull this off. They will then pass a new laws so that it will never happen again.


Mikey
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