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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

Friday, October 10, 2008

The Flight to Safety...Watch Gold

The two areas that investors are putting their money in this flight to safety is Gold and Treasury bonds. Where is the money comming from in this flight to safety. It is comming from equity. The same equity investors that were in a flight to growth just 12 months ago. You know the commodities and the world economic growth story. They now know that was a bad idea. What is funny about this game is that the flight to safety is just as bad a move today as the flight to growth was last year. The beat goes on.

The price action in Gold will tell you if the system is getting its act together.
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2 comments:

WLD said...

any buys at close mikey ?? or wait it until next week ?

October 10, 2008 at 1:16 PM
jaxwhitey said...

Gold is shaking already, I like it Mikey

My March $60 puts have tripled in value eventhough gold was up about $100 for the week earlier. The market knows the direction it's going to be heading and that direction won't be up.

October 10, 2008 at 4:06 PM

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