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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, February 3, 2010

The Last piece of the puzzle

The earnings have been great, the manufacturing numbers have been great, the consumer sentiment numbers have been great...what's next? Oh of course, it's great employment numbers. You know the drill ...much better than expected.

I see that "traders" don't believe this last rally so let's convince them with great employment numbers on Friday. I think you would get a buy signal off of that piece of news. The catch is does it reverse off of that report. The reverse does not have to be the same day. I would suspect they will give the "traders" time to buy back the longs they just sold which may take 2 weeks. That reversal will be my short signal.

The beat goes on....MIkey
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