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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, November 21, 2008

Wanna buy a bank?

8:14 DJIA 7540 -9.24 VIX 77.33 (unreal) Gold 788.20 +39.50 Oil 49.40 -.20

The markets are having a going out of business sale on the banks today. There is said to be no confidence in Paulson and the financial system. Gold is reacting like the world is comming to and end and maybe it is. The stock market is breaking its lows. I am hearing that it will not be a fast turn around and not to expect a big rally from here. I like this kind of talk. The conditions are ripe as they can get now for a big rally as the traders are clearly giving up on the bottom now. This is maximum fear. I will continue to bet on the system and have added to UYG 3.66 and XLF 9.00 today. We have fallen over the edge of the cliff and as I said yesterday Armageddon is at hand. Will the invisible hand grab us as we fall. I have been here before and the hand was always there. Stay tuned to this blog and we will find out.

On Gold I beleive that this is a great short here and will be buying more DZZ very soon will let you know. My beliefs are being challenged I will play out this hand as they deal the cards. I am holding a straight flush and I think they have a pair of 2's and are bluffing. If they have a Royal flush they win. The beat goes on ...Mikey
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