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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

Wednesday, May 20, 2009

Dollar at 6 month lows Gold, Oil, Commodities Touted heavily

Gold 937.40 +10.40 Dollar Index 81.30 -.75

Dollar bashing increases as it makes a 6 month low and the Gold bugs come out of their holes. They have my attention and I am going to be adding to my GLL (Short Gold) position soon. Will let you know. The safest way to short Gold is if it closes below 880. I will add if it trades above 950.

I am also interested in short Oil and shorting the Euro and the China stock market. I will use the SCO 22.61 as an oil short and the EUO 20.77 as a Euro short and the FXP 15.02 as the China short. I have not pulled the trigger on these yet.

The story is that we are going to have inflation and the economy is bottoming. I consider that laughable. The touts are now telling us that the economy is bottoming and the commodities action is validating that. They did the same thing last year. You know the world economy is good and the demand for commodities is going to be big. How did that one work? Same old BS now. The trends on these are down and this rally when it ends will roll over in a hurry. They should all blow the lows out. The situation now is one where they are smoking the shorts and sucking in the public.

I will begin to position these shortly ....MIkey
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