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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

Monday, October 19, 2009

Weakness and diverences emerging

DJIA 10100 +104 SPX 1098 +10.82 VIX 21.09 -.34 Gold 1061 +10.40 Silver 17.72 +.30 Oil 79.35 +.82 RBOB (Whsl Gasoline)1.98 +.0007 Dollar Index 75.51-.26 EURO 1.4939 + .0047 UNCH Long Term Gov Bonds) 95.98 +.43 IEF (7-10 Yr Gov Bonds)91.83 +.04 XLK (Tech)21.30 +.08 XLE(Oil Index)59.83 +.83 XLF Financials Index)15.27 +.05 15 XHB (Homebuilders Index)15.46 -.01 EEM (Emerging Markets)41.46 +.71 FXI (China Index)44.45 +1.28 GDX (Gold Miners Index)48.42 +.04


I am seeing weakness is some of the early groups emerging. More and more stocks are starting to reverse their breakouts. I also see the MACD diverging on Gold and the EURO. I think we are about as far as this move is going to carry us. I see the GDX running out of steam and the XHB homebuilders is flashing a sell signal now. The dollar is set up really well for a good sized rally now. Just like the Raiders were set up against the Eagles yesterday. ...Who would have known?

The beat goes on...Mikey
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