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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, November 5, 2009

Easy Money?

DJIA 9969 +167 SPX 1061 +1515 VIX 26 -1.72 Gold 1087.90 +.60 Silver 17.36 -.04 RBOB (Whsl Gasoline)1.9809 -.0237 Dollar Index 75.94 +.11 EURO 1.4847 -.0002 TLT (Long Term Gov Bonds)93.07 -.14 IEF (7-10 Yr Gov Bonds)90.49 -.02 XLK (Tech)21.19 +.42 XLE(Oil Index)57.02 +.75 (XLF Financials Index)14.26 +.25 XHB (Homebuilders Index)14.42 +.32 EEM (Emerging Markets)39.51 +.61 FXI (China Index)44.06 +.87 GDX (Gold Miners Index)46.35 -.30

The Fed yesterday left rates unchanged and expects to keep them here for an extended period of time. The "market reaction" was a big run up because the easy money policies are going to continue, but is it really easy money or just cheap money that no one can borrow. There is a big difference because this cheap easy money is only available to a small elite group. The money is not available to the economy and the public as a whole. The average person can't get a loan and their rates are actually being raises. I am saying that the FED is tightening not easing and the money is not easy but hard to come by. The economy is getting choked now and the banks and the Fed is are doing the choking.

The idea of inflation or a growing economy here is just not possible under these kinds of conditions. The talk of excessive printing of money is not true. They are not printing enough money to replace the lost value assets that came when the bubble burst. An analogy would be that if you had a swimming pool that held 1000 gallons and drained the pool to 500 gallons then added 300 gallons back into the pool the pool would still not be full. Then to top it off you put a no swimming sign by the pool what good would the pool be. Lower rates do not mean easy money. The no swimming sign has been posted and the pool is only 2/3 full.

They are selling the idea that inflation is coming because of easy money. It is a false argument but when they show you Gold making new highs it becomes believable. They have control of prices and can move them at will but in the end prices will seek their own level because the truth does come out in the end.

The public is hearing words like soaring when they talk about commodities and Gold. Those words draw them end like a moth to a light. It difficult to stay away from these markets when it is so easy to make money because you just buy every pullback. That is the nature of what they do. Most are drawn in and they are able to distribute their assets to the public. Easy, that is what they want you to believe. Maybe for now but easy ends bad.



The beat goes on....Mikey
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