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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, July 1, 2009

The Big Picture ...Trends on DJIA

Long Term 200 Monthly 8994 Tilt: Flat

Long Term 200 Weekly 11312 Tilt: Falling

Long Term 200 Daily 8453 Tilt: Falling

Intermediate 90 Monthly 10508 Tilt: Falling

Intermediate 90 Weekly 10562 Tilt: Falling

Intermediate 90 Daily 8016 Tilt: Rising

Short Term 20 Monthly 10214 Tilt: Falling

Short Term 20 Weekly 8028 Tilt: Rising

Short Term 20 Daily 8572 Tilt: Falling

I use the direction of the 200 week as the long term trend. I use the direction of the 90 day as the intermediate term trend. I use the 20 day as the direction of the short term trend.


Therefore the trends are as follows.

Long Term : Down
Intermediate term: up
Short Term Down

I will go long in a downtrend only when we are oversold..the experts are extremely negative and that message is being viewed by the public on the nightly news and the VIX is in the 40's and the intermediate trend turns up

I will go short in a long term down trend when we are overbought.. the Vix is in the low 20's and the experts are selling sunshine and the public is being sold that message on the news and then the intermediate trend tuns down


If the situation becomes very oversold or overbought I will begin to stage in my buys or sells. At this point I think we are overbought in a long term downtrend but not very overbought. The intermediate trend is still up. I will hold off my shorts here until it becomes very over bought or the intermediate trend rolls over.


Mikey
In the future I will post the direction of the trends and overbought or oversold condition of all of my trades.
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