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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, October 16, 2008

They are all waiting for the retest

11:10 DJAI 8574 -6.93 VIX 77.20 Gold 803 -35.70 Oil 70.59 -3.95

The pundits all think we retest 7700 the low from last friday. Today as of yet that has not happen and who knows it may. I have learned that when the traders are all looking in one direction it usually goes the other way. That would be my guess. The options expire tomarrow. That can be interesting in that alot of surprises have happened on the day before option expiration. I know that there have been a ton of puts bought over the last 2 weeks that includes the next 3 months of OCT NOV and DEC.
I think that the Nov and Dec puts will be worthless what would be cool is the OCT were also but they may have run on the rally on Monday Tuesday.

12:43 DJIA 8867 +289 VIX 78.10
Nice reversal so far looking good. VIX is still high so they are still scared ...that's good for the good guys.

Close DJIA 8979 +401 VIX 67.61 Gold 801.50 -34 Oil 69.85 -4.69 They are still waiting for the retest and the VIX says they are still scared.
The beat goes on ...Mikey
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