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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

Monday, August 30, 2010

Success is.....

DJIA 10009.73 -140.92 VIX 27.21 +2.76 10 year 2.2.52 -.01 30 year 3.57
Gold 1236.76 Oil 74.70 USD 83.17 +.17
Days to option expiration 14

Economic Conditions: Negative -10
Fundamentals very negative

Mikey OB/OS index 51, Neutral

Put/Call Ratio .86 7 day average .894
Ratio Put Premiums/Call Premium 1.07 Elevated
Put Premium 7 day average 1.019

DJIA MACD -100 Cross Negative 8/12 15 days old
Summary: Indicates a downtrend in progress

% Advisory Service Bulls 33.3 Bears 31.2 Moderately Bullish
US Mutual Funds cash position 3.5% Low cash (high 6.2% Low 3.3%)
Summary: Experts too bullish for a good low now

NYSE New Highs 66.. New Lows ..34
Nasdaq New Highs ..23 New Lows ..60

IBD : Confirmed downtrend as of 8/24

Mikey Power Index (MPI)Uptrend Above 60, Sell below 50, Downtrend below 40
Stocks 32 Bonds 79 Emerging Mkts 18 China 27 Brazil 31
Oil 37 Nat Gas 19 Copper 65 Gold 63 Silver 74
USD 64 Aussie 29 Euro 25 Brit Pd 40

Short ETF SCORE 811
DXD 67 DZZ 37 ZSL 27 DUG 67 EDZ 66 SMN 54 SKF 63 SRS 55 SZK 62
QID 77 SCO 75 RXD 63 TBT 20 SDP 78

Long ETF SCORE 617
DDM 34 UGL 59 AGQ 73 DIG 35 EDC 29 UYM 47 UYG 41 URE 46 UGE 61 QLD 26 UCO 32 RXL 36 UBT 67 UPW 31
Total Score -194(Positive number indicates uptrend)


Winston Churchill said: Success is going from failure to failure without a loss of enthusiasm. In the stock market most people stop at the one yard line and that is by design. It is said that the market can act irrationally longer than you have money. The point is that the market never discounts anything. It will frustrate anyone who is smart enough to figure out what is going to happen. That is why you will always hear I knew that was going to happen. You knew it was going to happen because is was happening right before your eyes and still the price went in the opposite direction. It did so as the public clamored for more and pounded on their chests in delight. This is the way of the market.

Such is the state of the market now. The DJIA is at 10000 and the economy is at 8000. Now the Fed steps up with its we will do anything speech. Of course they will, but not now. They need to sell their bonds and that will be easy in a stock market getting drilled. It's coming and I think soon. The last bounce off of 10000 was an attempt to show that the Fed has the muscle to do anything at any time. Lows only come when the Fed look toothless so low is going to break and break big.

There was a story told about J.Paul Getty. In this story he was approached by his pastor at the end of a service and was asked by the pastor what he should invest in. J. Paul said, I have a railroad that is making alot of money and investors will do well by buying shares in it.

The railroad did well and the shares went up for the first year that the Pastor held the stock. Fast forward to the end of year 2. The pastor sees J. Paul back in church again and tells him that he invested in his railroad. He says that he had lost all of the money he had invested. J. Paul then asks him how much did you lose, Pastor? The Pastor replied 25,000. J. Paul then pulls out his checkbook and writes the Pastor a check for the full amount. The pastor thanks him but says I told alot of people about this railroad. J. Paul says, that is why I told you.

These stories about sum up all you need to know about the stock market.


Mikey
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