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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, December 5, 2008

Interest rate check

3 month Bills .1%
6 Month .255%
2 Year .8118%
5 Year 1.513%
10 Year 2.5513%
30 Year 3.038%

Thought you should know what the Government is borrowing money for now. By the way the average spread between 30 year Bonds and 30 Year mortgages is about 1.25% so you can see that my call of 4.25% 30 year mortgages is in the ballpark now.
After the new stimulus package is announced at 600 or so billion combined with 4.25% 30 year mortgages I would guess that the market at some point wakes up and takes off like a rocket ship to the moon. Right now the rocket is on the launching pad and massive amounts of fuel are being loaded. Ignition is when the mortgages are refied and the tax cuts and tax law changes kick in.
In my opinion, this market and particularly the financials are an opportunity that we won't see for a long long time. The UYG 5.40 is going to be a monster.
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