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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, November 3, 2009

Next stop 9400

DJIA 9705 -84 SPX 1035 -7.31 VIX 30.39 +.31 Gold 1077 +23.60 Silver 16.93 +.49 RBOB (Whsl Gasoline)1.9758 -.0145 Dollar Index76.33 +.34 EURO 1.4639 -.0126 TLT (Long Term Gov Bonds)94.45 -.60 IEF (7-10 Yr Gov Bonds)90.80 -.18 XLK (Tech)20.50 -.21 XLE(Oil Index55.80 +.20 (XLF Financials Index)14.00 -.17 XHB (Homebuilders Index)13.97 +.14 EEM (Emerging Markets)37.78 -.37 FXI (China Index)42.22 -.52 GDX (Gold Miners Index)45.26 +2.36

I expect this break will take us to around 9400 where there should be a good sized bounce. Gold is making a new high today but the GDX 45.26 is way off of its highs of 49.19 and I don't expect this move to go anywhere.

Most early stocks including the GDX sold off to the 90 day average which is DJIA 9376. That is where I get that number. This number would break the October 2 low and draw in some sellers. Of course the boys would have to buy and would then make up some excuse to rally so they could sell what they bought at that level.

The XLF is a leader and is already at that level. The Oils and big averages are lagging and should catch up. The rally today in the transports comes after its move to the 90 day and a break of its Oct 2 low day. The players sold that break and today Buffet buys out BNI today and presto the boys make an instant profit. Thanks Warren for waiting for that chart break before you bought out BNI.

With the XLF 14 already at the 90 and below its Oct low...can you say bank buyout?
They will come up with something because they are obviously buying bank stocks now.

The beat goes on ...Mike
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