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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

Monday, March 23, 2009

Mikey turns bearish on Oil and bullish on the dollar

DJIA 7775.86 +497.50 Gold 938.30 -14.20 Oil 53.61 -.16 Dollar Index 83.95 -.69

Oil is moving with the last pullback in the dollar. I think it is time to sell oil now at 53.61. I believe that it has benefited from the recent spat of inflation mania brought on by the Fed announcement of their purchase of 300 billion in mortgages. That move is to inflation as lighting a fire without oxygen. It ain't gonna happen now. This is initial stage where money is put in the system. Inflation will happen down the road after the Oil and Gold bugs are nailed just like the average investors was in their 401K.
The dollar will be the strongest currency because the US is out in front of all the other economies and more will have to be done in those other country's to get their economies going. The US will be first out of the recession and the others will lag. That creates a demand for the dollar and will put pressure on the commodities.
So I am moving to the sidelines on my DXO (3.23) and will concentrate on the financials. I think there is alot more to go there before they can raise private equity which is the stated intent of the treasury secretary.


I AM NOT SHORTING OIL JUST SELLING THE DXO NOT THE DIG.
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