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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, May 26, 2010

This decline looks done in the short term

DJIA10136 +92.43 SPX 1086 +12.35 Nasdaq 2241 +30.57 VIX 31.38 -3.23 Gold 1212.80 +14.80 Silver 18.27 +.489 Oil 71.31 +2.56 RBOB(retail gas)1.96 +.04 Nat Gas 4.20 +.15DBC (Commodities)21.60 +.31 EURO 1.2237

I think the decline is about over for this period. I think they know we are in a correction and are not looking up now. The VIX got up to 48 on this last sell off and in a bear market this is as bad as it normally gets(crash excepted). I would look for something in the low 20's to start building my shorts back up again.

So I think we rally. Not too much maybe 10700 or so. It may stay up until early July. I have sold half of my double shorts and will look to get in on a market rally. I am adding to my DZZ 11.20 and ZSL 34.97 and expect Gold to get clocked when the resolve Europe.

I think the next part of this story will have Europe appear to get their act together and the market to respond with a good rally to tell the players that it was just Europe that caused the sell off and nothing is wrong with our economy. I believe that we have big problems ahead and that before it is over we will either be in a recession again or everyone including the market will believe it.

In this phase, that we are in now, I expect the EURO 1.2237 to rally and Gold 1213 to get nailed. The sell off in Gold will have nothing to do with the EURO rally and no one and I mean no one will believe the sell off.

In summary, I think on balance June is an up month for stocks and a down month for Gold. Where are the players lined up ...just the opposite.

Mikey
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