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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

Friday, December 11, 2009

Dollar Strong on US economy or World Weakness?

The strength in the dollar is about world weakness and not strength in the US economy. Look at the chart on the Bank of Greece this is after Dubai blew up last week.




The world financial system is all based on high commodity prices and growth. The story is that this is coming next year with the renewal of the economy. This is exactly what happened in the US in 2007. That year the banks blew up because Real Estate values got hit in 2006. The loans went bad and the leverage killed the banks.

Now the commodity loans are starting to blow up those loans will start taking down the world economy. The dollar is strong not because the US economy is strong but because the rest of the world is weaker. Lower commodity prices are a really bad thing and the system is doing all it can to lie about the recovery and prop up those prices. You can see that oil prices and starting to cave in and that ain't good for their story.

Gold is also rolling over that is the one that tells everyone that inflation is coming. Bit by bit the story will unravel just like real estate and the real estate loans. Next year looks real bad to me.

Mikey
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