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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

Thursday, October 29, 2009

All Part of the Game

DJIA 9938 +176 SPX 1063 +21 VIX 24.96 -2.95 Gold 1046 +16.40 Silver 16.63 +.395 RBOB (Whsl Gasoline)2.02 +.035 Dollar Index 76.09 -.49 EURO 1.4826 +.0129 TLT (Long Term Gov Bonds) 94.34 -1.12 IEF (7-10 Yr Gov Bonds)91.32 -.43 XLK (Tech)21.15 +.38 XLE(Oil Index)54.47 +1.53 (XLF Financials Index)14.69 +.55 XHB (Homebuilders Index)14.44+.56 EEM (Emerging Markets)39.43 +1.70 FXI (China Index)43.34 +1.15 GDX (Gold Miners Index)43.82 +1.95


The GDP came in better than expected and the pimps are coming out of the woodwork crying the economy had bottomed buy the commodities sell the dollar. The fact is that too many stocks have broken down and it was becoming obvious that the market had topped. I was hearing experts say that if we fell below 1050 on the S&P that it was over for now.

The game is to reverse directions when the short term players start to catch on that something is happening. That is what today is all about. The market had made a lower low and flashed a sell signal. The players were getting short so on the open they give them a great GDP and a nice big rally to deal with. As I said before this this is going to stair step its way down so that no one is comfortable or will be able to figure it out.

I will short this rally at some point in the next 2 to six days. This kind of rally will be happening alot on the way down. The fact still remains that the economy has had it and this thing ends bad. This rally is to the economy as the "good" earnings were to the stocks that took out their highs and then tanked. The price of admission is that nothing comes easy. If you are short today is tough to take but it is just part of the game.

In a bear market every new low is followed by a sharp rally that keeps the longs in and stampedes the shorts. Today is the first of many of this sharp rallies that we will have on the way down.


The beat goes on....Mikey
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