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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

Saturday, May 30, 2009

My Game plan

First buy on FXP(China Short) @13.82
Next buy order on FXP @ 10.01

First buy on DUG @18.02
Second buy on DUG @ 10.32

First buy on ZSL @9.42
Second buy on ZSL @ 6.54

First buy on GLL 16.5
Second buy on GLL @ 10.78

Looking to short AEM @ 65

Looking to short MCD 58.24 @62

I have changed some of these numbers and given them more room. The idea is that this the first bounce on the foreign markets, the oil market and the metals market. I fully expect for these to have the same decline as our stock market did. In other words, to erase the move over the last ten years. To me silver goes back to 5 Gold goes to 400 and Oil goes to 25. I think the players getting sucked into these as they did on our market at the end.

The prices I have chosen represent rallies to the underside of the intial breakdowns. In the case of the FXI(China Index) the breakdown was at 42.36. The current price is 37.37. A move to 42.36 from here is 13%. The FXP move double the % of the FXI inversely so I expect that it should decline to .74 of its current price of 13.65. Therefore the target buy is ..74 X 13.65 or 10.01.

I am using the XLE as the oil index now at 51.68. The breakdown on this index was at 62.50. That would be a 20% move up from here. The DUG 17.20 that moves inversely 2 times to that index should drop 40% from here. The target buy would be 17.20 X .6 or 10.32.

On Silver the breakdown was @ 16.33 silver closed at 15.47 Friday. The return to the breakdown of 16.33 would be an increase of 5.5%. The ZSL which is 2 times the inverse of silver is at 7.35 it should decline 11% to 6.54.

Gold now at 978 had a high of 1008 and I am going to give it room to take out the high by 10% to 1108. That should suck in all the bugs for good. The GLL double the inverse of Gold should decline 22% to 10.78.

AEM 61.86 broke down at 62.50 and I can short that right here if I wanted to but I am giving is another 3 points of room to 65.

MCD 58.99 broke down at 60 and is nearing it break down.
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