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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

Tuesday, March 3, 2009

Gloom and Doom

DJIA 6786 +23.34 Gold 915.50 -24.50 Oil 40.87 +.72 Dollar Index 89.21 +.14

We have taken out the lows at 7400 and are 600 points below the low. The stimulus package and the new TARP money is just about to enter the economy. The medicine has not yet been administered but all and I mean all of the experts say it won't work. There are signs that the banks will work with homeowners on their credit problems but for now the mood is hopeless.

I see NBC morning news on the floor of the stock exchange telling the masses that we are going to have a depression. That is as good as it it gets.

If a rally were to develop from here no one would believe it or chase it.
That is exactly what we need now and I look forward to that rally. Gold have rolled over from its double top at 1000 and I believe it will be a source of funds just as every other asset has been. I still look for Gold to hit 400 and the market to have an huge rally from these levels.


The beat goes on....... Mikey
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