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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, May 11, 2009

Deflation, and Corporate Welfare, a new high in Bonds and $400 Gold

DJIA 8457 -117 VIX 32.74 Oil 57.98 -.65 Gold 914.50 -.40 Dollar Index 82.67 +.03

After this rally in the market and this rally in oil and the commodities the bad news will return. It will be about the world economy and a collapse in the commodities markets. They want out of their cyclicals, techs and oil stocks. and the "experts" will be selling them hard to the public. They will be telling the public that the FED is printing money and it will turn into inflation. They will say that the bond market will get hit hard because no one wants dollars.

The truth is that the bonds and the dollar are a great buy in this selloff. The public will be selling the bonds that they bought to be safe (how did that work?)...remember last year? They will be buying Gold and Oil stocks and as always they will be getting killed. The selloff on the commodities is just the first hit from the high we have a long way to go before they bottom. If you buy Gold you will get what you got if you were in the stock market last year.

The biggest problem later this year will be DEFLATION that is when the 30 year bonds make all time highs and the 30 year mortgages drop to below 4% as I mentioned last year. Oh by the way Gold will be selling for 400 just when the bonds make their new high. This will confirm the idea of deflation and send the lemmings back into the safety of bonds and out of stocks and commodities. The stock offering now are designed to get the corporations liquid through the next 9 months. They will need the money because the earnings won't be there.You see capitalism is corporate welfare and these offerings are their welfare checks. The checks are going to be paid for by anyone who buys stocks this month....Mikey
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