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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, November 23, 2009

Here's another bearish article on the Dollar...Everyday now

DJIA 10450.95 +132.79 SPX1104.40 +14.86 VIX21.21 -.98 Gold 1165 +18.20 Silver 18.58 +.14 Oil 77.60 +.13 RBOB (Whsl Gasoline1.9770 -.0036 Dollar Index 75.125 -.52 EURO 1.4972 +.0117 TLT (Long Term Gov Bonds)94.99 -.13 IEF (7-10 Yr Gov Bonds)91.71 -.13 XLK (Tech)22.06 +.37 XLE(Oil Index)57.35 +.75 (XLF Financials Index)14.81 +.21 XHB (Homebuilders Index)14.77 +.19 EEM (Emerging Markets)41.50 +.85 FXI (China Index)45.63 +1.03 GDX (Gold Miners Index)51.67 +.85

Short ETF's I own: BGZ (3X Big Cap Short) 18.07 -.69 ERY 3X Oil Index short 11.45 -.45 Gll (2X gold short) 9.30 -.26 ZSL (2X silver short) 4.06 -.04 FXP (2X China Short) 7.45 -.37 EDZ (3X emerging markets short) 5.26 -.34 SCO (2X oil short) 13.46 -.03 SMN (2X Basic materials short) 8.91 -.10 FAZ (3X financials short) 19.21 -.78

Just wanted to document the media blitz that is ongoing about the "weak" dollar.
Dollar Index at the time of this article is 75.125 where it has been for the last month. The Wizard wants you to know that Dollar is going down and is using considerable ink to make sure you know.
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Why the US Dollar Will Likely Remain Weak for Some TimeThe dollar is weak. Get used to it.

The U.S. currency's fate is tied to market speculators, geopolitics and economic-trade crosswinds and will remain weak for both the short-term and mid-term, unless major governments take unusual steps to intervene.

“There's been a very dominant trend since 2001,” says economist Chris Rupkey of Bank of Tokyo-Mitsubishi. “The foreign exchange market often deals with themes and it sometimes difficult to change those.”...(Take a look at the chart on MTU his bank)

And those themes, or trends, often remain in place for years. Since 2000, for instance, the dollar has slid from a record high against the Euro to a record low.

Though the U.S. currency is now very weak by historical standards, it has been this weak before. On a trade-weighted, inflation-adjusted basis, the dollar was actually weaker at two points in the 1970s, once in the 1990s and as recently as the first quarter of 2008. Of course, it was much stronger for much of the early 1980s, when it hit a record high. (see chart below)

“The charts suggest this is the new reality for awhile," says Robert Brusca, chief economist at FAO Economics. “Clearly, the dollar has to be weaker. That's rational."

Most economists are unwilling to declare that this is, in effect, a new dollar—weaker, of little stature and at immediate risk of losing its status as the world's reserve currency. At the same time, the greenback is unlikely to make a roaring comeback, as it did in the mid 1990s, the last time the doom-and-gloom quotient was high and market and political analysts galore were bemoaning the debilitating drag of the twin deficits (trade and budget).

At that time, then-Treasury Secretary Robert Rubin essentially launched the we-want-a-strong dollar mantra, which though very effective at first, has since become empty political rhetoric.

That’s where the national pride comes in. The world’s only superpower (for now) should have a powerful currency, reflecting its economic and military might. The difference this time is that a new economic-military superpower with a huge trade surplus is emerging: China.

Given all this, it may now be impossible, if not improbable, to achieve a strong dollar again. Nor will it become some sort of Banana Republic peso, even with the federal borrowing binges of the Bush and Obama administrations.
“I don’t think there’s a new norm, or era, dollar,” says Rupkey.
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Well as they say...another day and another dollar. The hype we have over this trade is so great that the first big sell off we get will be the beginning of an era of dollar strength that will last for years.

Remember, a DJIA below 10200 is my sell signal. I have a high confidence level that it will be before year end. Everyone knows the economy is in shambles and that is the reason for this rally. The Wizard has to make the rally creditable by price and time before the sell off begins. It is still to early to call the top but the first hit below 10200 will be a signal for me. No add ons today

Mikey
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