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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 15, 2009

Watch Gold here it is a leader

DJIA 10003 -13.62 SPX 1090 -1.16 VIX 21.90 -96 Gold 1061 -3.20 Silver 17.86 +.02 Oil 77.60 +2.42 RBOB (Whsl Gasoline)1.9555 +.098 Dollar Index 75.70 -.02 EURO 1.4912 UNCH Long Term Gov Bonds) 94.49 -.63 IEF (7-10 Yr Gov Bonds)91.31 -.35 XLK (Tech)21.29 -.07 XLE(Oil Index)59.06 +1.10 XLF Financials Index)15.58 -.15 XHB (Homebuilders Index)15.66 -.02 EEM (Emerging Markets)41.38 -.17 FXI (China Index)44.14 -.15 GDX (Gold Miners Index)48.43 -.70


Gold "broke out" above 1000 on 10/5. Since then it has had a move to 1070 and the public has taken the hook big. The market "broke out" 9 days later on Oct 14 and yesterday closed above 10000. I saw the break out on the evening news and on the front page of my newspaper today. I have had numerous people come up to me in the past 2 days rubbing it in for being short and asking me where is the sell off. It has been my experience that when they ask questions like that they will soon get the answer.

What I am looking at now is Gold which I see as a lead to the market. The dollar Gold relationship precedes the move in the equities. A close below the breakout at 1000 that would be interesting considering the bullish sentiment is at 70%. I would say a close below 980 would seal the deal. That would not be a good thing. The public has bought the story hook line and sinker and price weakness here is the end of it.

Today Oil is "breaking out" above 75 and is at 77. Just like Gold did on Oct 5Th. First Gold then the Market then Oil. It all makes sense doesn't it. This is after the blitz by the experts over the last 3 months to tell the Public that the economy is bottoming.

I had a person tell me that the economy was turning around because oil is rising and that means that there is greater demand and that means that the econmy is getting stronger. I all makes sense now and the markets have all broken out. The only problem is that the economy is still in the tank and the bottoming economy is in the minds of the investment bankers only. The pubic does not believe them but they want to believe and are investing as drunk leaving a bar would. They will wake up with a hangover and wonder what the hell they did.

The public has broken ranks and have started pouring money into high yield and muni bonds. They do not perceive any credit risk now. Just one year ago they sold these same things but earning 1/4% for 1 years has hurt them because their incomes have dropped and they need their investments to make them more money. The system is all to glad to unload the bonds they bought back last year when the public was told to sell them. Now they are being told to buy them and again IT ALL MAKES PERFECT SENSE.

My friends you will not read or see this anywhere because there is only money to be made by fleecing the public. I do not advertise or make any income from this blog. my only mission is to try and show my readers where is happening behind the scenes.
Sadly, only I can only help a small percentage of the people because the system is very good at what it does.

So lets keep our eyes peeled on Gold and see it if reverses as the Market gets all of the attention now.

The beat goes on....Mikey
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