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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, January 6, 2010

Weak Dollar.... Weak Market

DJIA 10580 +9.44 SPX 1137 +.93 VIX 18.79 -.56 Gold 1134 +15.90 Silver 17.78 unch Oil 82.73 +.96 RBOB (Whsl Gasoline)2.12 +.049 Dollar Index 77.82 -.03 EURO 1.4399 +.0042TLT (Long Term Gov Bonds89.77 -.62 IEF (7-10 Yr Gov Bonds)89.03 -.19 XLK (Tech)23.02 -.22 XLE(Oil Index)60.02 -.73 (XLF Financials Index)15.02 +.06 XHB (Homebuilders Index)15.47 +.05 EEM (Emerging Markets)43.19 +.17 FXI (China Index)44.48 +.45 GDX (Gold Miners Index)48.89 +1.73


I am getting a buy signal on Gold and a Buy on the GDX. The honks are getting too bullish on the Dollar near term so I would expect the Dollar to sell off in the near term. They are starting to associate the strong dollar with the strong stock market. So I think the market will start trading with the Dollar now instead of against it. My guess is that the market will sell off and break its 50 day at about 10200 in the near term. It would not surprise me to see weak employment numbers on Friday.

This is the first rally off of the first hit on Gold and the Gold stocks. I will cover my short on the GDX here but will short if it closes BELOW 47.50. I have covered my short on Gold but will short again if it closes below 1080.

Mikey
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