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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

Friday, June 12, 2009

Gold sneaking lower...at a 4 month LOW

DJIA 8765.18 -4.01 SPX 941.22 -3.71 VIX 27.90-.21 Gold 938.90 -23.10 Oil 71.76-.92 Dollar Index 80.10 -.67 TLT (Long Term Gov Bonds) 90.57 +1.08 IEF (7-10 Yr Gov Bonds) 89.28 +.68


Gold is sneaking lower down 23.10 at 938.90. That means that it is lower than the close of Feb 17th. Thus after all this dollar and inflation hype Gold is now DOWN FOR THE LAST 4 MONTHS. To me a close below 880 completes the top. Of course the sell off does not make sense given the news background so the odds that it will continue lower now are alot higher than the hit we had last year. This is also reinforces my opinion that the Fed is tightening not easing. I would expect oil to also follow Gold lower but it looks like it is 2 weeks behind.

The bottom line here is that after all that hype I will believe any sell off in the commodities and the market. Notice that the VIX 27.90 has continued to fall which is an indication that the players fear levels are falling. A VIX in the low 20 area would be a nice place to start shorting the market.

I don't know how they play their hand here but if oil drops and interest rates fall AND they tell you this is a good thing that would be a good cover story to move the market lower. Right now there are too many negatives to a market sell off.

The beat goes on...Mikey
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