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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

Sunday, July 11, 2010

That was the week that was TW3

Tuesday July 6 DJIA 9743.62 +57.14 10Yr note 2.94 -.04 Gold 1195.1 -12.60
Oil 71.99 -.16 US Dollar 84.30 -.37

Chip sales rose 47% year over year April was 50%. EPA wants to cut emissions on coal burning plants. ISM service sector index fell 1.6 pts to 53.8 in June. 50 is considered growth. World biggest IPO coming the Ag bank of China to raise 220.12 billion. Germany raise healthcare premiums to reduce deficit.

Tuesday started with an strong rally but retreated on the close. Stock funds fell 11%in June the worst since 2008

Wednesday July 7 DJIA 10018.28 +274.66 10 Year 2.99 +.05 Gold 1198.90 +3.80 Oil 74.07 +2.09 US Dollar 84.03 -.27

ISCS June retail sales strong same store sales rose 3.9% vs a year earlier. Dallas Fed Foster says law changes in Health care and Financials are holding back the economy. He says he does not expect a double dip recession or further Fed actions to fuel the economy. Credit delinquencies on consumer loans fell to 2.98% of all accounts. Credit card delinquencies fell to 3.88% an 8 year low.

Market was up strong on mixed volume. Commodities rally and the dollar sells off

Thursday July 8 DJIA 10130.99 +120.71 10 Year note 3.03 Gold 1196.10 -2.80 Oil 75.44 +1.37 US Dollar 84.03 unch

June sales rose 3.1% vs same in 2009. Sales have moderated in the last few months. Jobless claims fell to 454,000 down 12,000 from previous week. Continuing claims hit a 7 month low as benefits ran out for many unemployed. Federal deficit topped 1 trillion for the fiscal year. Payroll taxes declined 4% but receipts rose .5% due to higher corporate profits.

Stocks close up for the third day in a row on lower volume. The market focus is shifting from the current economy to earnings and corporate outlook for the future.

Friday July 9 DJIA 10198.03 +59.04 10 yr 3.05 +.02 Gold 1209.60 +13.80 Oil 76.09 +.65 US Dollar 84.15 +.12

ECRI leading index fell .07 points to 121.5 the lowest level since July 2009. The gauge annual growth rate fell to -8.3% from -7.6% suggesting that the US expansion will decelerate or even stall. Inventory restocking rose .5% in May but wholesale levels fell .3% the first drop this year.

The market trended higher all day in quiet trading. Next week the corporate earnings season starts. The market rally everyday this week and is in the midpoint of a trading range of 9750 to 10500. They are now turning their attention to outlook and earnings as the data on the economy turns sour. The fact about earnings is that they are rear view mirror and have nothing to do with outlook. Gold is weakening and is trading quietly below the 50 day average at 1209. My take on the process is that as the market is weakens, they shift the focus to something that cannot be proved, the future.

Mikey
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