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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, June 15, 2009

How to know when the economy is growing

You will know when the economy is growing WHEN THEY RAISE THE INTEREST RATES. That is a long time off. They started to raise the rates in June of 2004. They told us then "don't fight the Fed" they are slowing the economy. In June of 2004 when they started to raise the rates the stock market was right at 10000.

The economy topped in Q4 of 2007. Buy the way they started lowering the rates in August of 2007. The following Qtr the GDP declined. The stock market topped in Oct 2007 at 14200. They told us then don't fight the Fed that they would save the day...remember? Well the rates are still down and they are saying we have a recovery coming. NOT! It is better to be late to the party than early.
To be an economic wiz just watch the rates.

Mikey
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