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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, October 20, 2010

Bank of America says who me???

Both the New York Federal Reserve and Bank of America have been trying to calm jittery markets today by explaining that the Fed isn’t taking a regulatory action against Bank of America.

Why should the Fed have to explain this? Because yesterday the Fed’s Maiden Lane operation was part of a group of bond investors that were demanding Bank of America buy back loans included in $47 billion of mortgage-backed securities.

That puts Bank of America in an awkward position. One of its primary regulators is demanding that it repurchase mortgages that were allegedly ineligible to be included in the pools that underlay the mortgage backed-securities. But the regulator isn’t doing it as a regulator—it’s doing it as an owner of the securities.

Both Bank of America and the Fed are trying to parse out the Fed’s weird role here. But when is a regulator not a regulator?

Let’s go through this one more time. The Federal Reserve is one of the primary regulators of the banking sector (the FDIC is the other one). It has authority to force banks to undertake almost any action it decides is necessary for the health of the financial system and the economy. The breadth of the Fed’s regulatory authority is extraordinary, especially following the passage of Dodd-Frank.

But in this case the Fed isn’t using that authority. Instead, the New York Fed is acting as a private buyer of mortgage-backed securities. Through its Maiden Lane funds, the NY Fed has purchased billions in mortgage-backed securities as part of the bailouts of Bear Stearns and AIG.

To make matters even more confusing, Bank of America’s [BAC 11.75 -0.05 (-0.42%) ] liability in this matter arises because it purchased Countrywide, which is the servicer for the mortgage-backed securities at issue. The acquisition of Countrywide in 2008 was approved by the Fed. Lots of people think the government actually asked Bank of America to acquire Countrywide to prevent the mortgage lender from outright failure.

Was Bank of America trying to pull a fast one on Uncle Fedly???? and how many other banks have done the same thing??? This is a still a big mess and when the Fed takes it public then what is next??

Mikey
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