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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 8, 2010

Rock bottom interest for who?

US Consumer Credit Plunges in May

U.S. consumer credit plunged in May and was revised down sharply for the prior month, suggesting Americans are still leery of taking on new debt despite rock-bottom interest rates.

The Federal Reserve said Thursday that total outstanding consumer credit to U.S consumers fell by $9.15 billion in May.


The Federal Reserve said on Thursday total outstanding credit to U.S. consumers, everything from car loans to credit cards, fell $9.15 billion, much sharper than forecasts for a $2 billion decrease. April's reading was revised to a hefty $14.86 billion drop from the originally reported rise of $1 billion.

Consumer credit peaked around $2.58 trillion in July 2008, just before a worsening of the credit crisis brought down financial giants like Lehman Brothers and American

International Group [AIG 35.51 0.17 (+0.48%) ]. Since then, it has dropped by more than $160 billion.

Revolving credit, mainly credit card accounts, was down $7.32 billion, while non-revolving loans for things like cars, boats and a college education fell $1.82 billion.


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Credit is the life blood of the economy. The rates are low but for whom? We all know that the banks can borrow for .25% but the consumer has to pay any where from 15 to 25% on his credit card. Mortgage loans are hard to get for the average consumer and that is why there is low demand for them. The demand is there but Scrooge is not turning lose of his money just yet. The money supply is falling because the banks are cutting credit availability to the consumer. Without credit the "consumer" (read the average guy) is dead in the water.

Mikey
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