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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

Tuesday, October 20, 2009

Apple, Cat blow away earnings...Top near

I mentioned yesterday that I am seeing weakness spreading in the broader market. This weakness is early but is an indication that we are approaching some kind of a sell off. CAT and AAPL have announced blow off earnings. That will be the cover story as the public is lead to the "good news" and not shown the weakness.

The GDX is flashing a short term sell signal. The Euro is also getting hit hard this morning. I think CAT 59.01 and AAPL 198.71 are great shorts in here. They will problably hold them up several days but I think they are played out now.

The EWZ (Brazil) 72.76 is getting hit from its intital top of 77 yesterday on news that the they are going to raise taxes on foreign investment. 9 out of 10 times this will be denied by the country and the stock will rally back to a slightly higher high. Its the second sell off that you want to short not the first one. I am short this one at 66 and will short it again on the return to the top.


AAPL 199.05 +9.28 has returned to its pre market highs it hit in Dec 2007. It is my belief that in 1 year it will be a $40 stock.

I will post signals as I see them .

Todays GDX short term sell signal at 47.02

The beat goes on ...Mikey
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