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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 6, 2009

In Your Face Rally...Dollar weakness = World Growth

DJIA 9753 +153 SPX 1058 +17.88 VIX 25.49 -1.35 Gold 1041 +23.80 Silver 17.36 +82 Oil 71.62 +1.21 RBOB (Whsl Gasoline)1.79 +.03 Dollar Index 76.37 -.46 EURO1.4736 +.0076 (Long Term Gov Bonds) 98.03 -.99 IEF (7-10 Yr Gov Bonds)92.46 -.49 XLK (Tech)20.75 +.33 XLE(Oil Index)54.64 +1.52 XLF Financials Index)15.03 +.29 XHB (Homebuilders Index)14.78 +.28 EEM (Emerging Markets)39.62 +.88 FXI (China Index)41.83 +1.36 GDX (Gold Miners Index)47.77 +3.21

Last weeks economic numbers have faded into the distant past and that only took 2 days. Forget about unemployment in the US the world is growing who cares. That is is message today. This is the same message they gave us going into the top in 2008. Remember China and the emerging markets and commodities and oil. That is the same recording they are playing now. It will have the same outcome as it did then because it is a bald faced lie.

I am hearing a lot of public talk from very respected money people that the dollar is going to be replaced as the world currency, They are talking about the EURO replacing the dollar. The world bank president mentioned this last week and I also saw that Bill Gross mentioned that the dollar will not rally anytime soon.

The Dollar is in the spotlight and it is near its lows again. The trashing of the dollar has been going on for a long time now and basically it has moved very little from a year ago and is gained ground against the EURO over the past year and one half. My position is still that the dollar is going to be strong against the EURO because the Europeans have done little to support their economy and it will fall faster than ours.

The whole market play is based on a weak dollar. It is an easy conclusion to believe that the dollar is going lower. I would say that if I took a survey I would not find one person who thought the dollar was going to rally. In fact, I would think that they would just laugh at the question. That was the case in May 2008 when the EURO was 1.60 vs the dollar and on the stock market hit went to 1.24 vs the dollar. The EURO is now 1.47 vs the dollar so even with all this hype that the dollar is going down it is still higher than the EURO was in May of 2008.

I'll bet that would come as a surprise to everyone who has been listening to the press dollar bashing for the past 6 months. I think that some big event is going to happen that will send the money back into the dollar. It will be something that will be a flight to safety thing. It will also come out of the blue and no one will see it coming.

No trades today holding shorts looking to short more Gold and Oil


The beat goes on ...Mikey
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