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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

Wednesday, November 18, 2009

Where is the Dollar


Every day for the past 3 months I have heard about the Fed printing money and the resulting decline of the dollar. I would like to put this in perspective. The dollar as measured by the Dollar index today is at 75.07. The index was at 74.97 one month ago on Oct 22 and was at 71.57 om March 13, 2008. The price does not jive with the story.


News today:

U.S. mortgage applications fell last week, with demand for home purchase loans dropping to a 12-year low even as interest rates on 30-year loans fell to their lowest level in six months, data from an industry group showed on Wednesday.

Home purchase loan demand fell for a sixth straight week, a trend that does not bode well for the U.S. housing market, which has been showing signs of stabilization after a three-year slump. You don't have economic recoveries without a recovery in the housing market.

Market Tips: Everyone's Talking About Year-End Rally
Global stocks and commodities rebounded on Wednesday, with gold rising to a fresh high near $1,150 an ounce. Experts told CNBC stocks are likely to rally through until the end of the year.

Gold Could Hit $1,400 This Year: CEO
The gold rally is far from over and the price of the precious metal could hit $1,400 per troy ounce by the end of the year and keep rising from there, James Turk, CEO of GoldMoney, told CNBC.

If you’re waiting for a correction, hope you brought a book. You may be waiting for a while.

At least, that’s what Raymond James chief investment office Jeff Saut seems to be suggesting. In an article published on Minyanville Saut makes the case that a correction probably isn’t in the cards, -- at least if history is any indication.

First ,“we just entered the best six months of the year for the equity markets,” he says. (November through April have, on average, shown superior stock market performance )

Second, “over the past 12 years the Dow has always shown a profit between November 11 and December 5.”

But that’s not all. Saut thinks history may be repeating itself – in an even bigger way.

S&P Action Repeating Itself

Since last April Saut has been using the stock market’s chart pattern from 2003 as a template for this rally – and it’s been spot on accurate.

In case you're like us and not immediately familiar with the market action of 2003-- in a nutshell, ”the S&P 500 bottomed in March 2003 and rallied sharply into June,” he says. “From there it flopped/chopped around for a few months, but never gave back much ground.”

Sound familiar? Well guess what, there’s more.

“In late 2003 stocks took off on the second leg of the rally, rising into the first quarter of 2004,” he says.

And get this. The first leg of the 2003 rally was driven by liquidity-- much like 2009’s first leg (March to June) – while the second leg of the 2003 rally was driven by improving fundamentals and earnings -- just like 2009’s “July through now” rally.



Sooooo they are all looking for a year end rally and 1400 Gold. What they are all saying is to buy the easy money rally now before it gets away from you. I am very sure that the opposite will occur.


Mikey
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