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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, June 18, 2010

Options expire and June puts go to Heaven

DJIA 10429 +26.30 SPX 1118 +1.96 Nasdaq 2310 +3.11 VIX 23.80 -1.25 Gold 1258.4 +9.70 Silver 19.15 +.379 Oil 77.04 +.25 RBOB(retail gas)2.14 -.019 Nat Gas 5.03 -.13
DBC(Commodities)22.37 -.06 EURO 1.2373 -.0014 Aussie .8692 +.0024 Dollar 85.95 -.03
EEM (Emerging Market Index)39.90 +.16 EWZ (Brazil)67.27 +.43 FXI (China) 40.62 +.01
TLT (LT US Bonds)97.60 -.25 IEF (7-10 yr US Bonds)93.55 -.18 GDX(Gold Miners)54.14 +1.18 IYR (Real estate)51.17 -.21 (XLF Financials)14.82 +.04 XLE (Oil) 55.55 +.03 XLB (Materials)30.95 +.04 XRT (Retail)39.46 -.40 XLK (Tech)22.33 -.08 XLV (Health care)29.58 -.28 XHB (Homebuilders)15.86 -.16


Today is options expiration's day. The first week out of the May expiration was below 10000 and Europe was collapsing. The VIX was in the mid 30's and the boys were calling for a correction. The oil spill was in full force and the picture was grim. Miraculously on options expiration's we have rallied 600 points from that mess and the world is a safer place. Who would have known?

That is the nature of this game and it never changes. Reality is what they say it is particularly in the short run. I am trying to guess their story just as you are. So where does it go from here. I think there is still some more works to do on the upside to convince the shorts that they are in the wrong place. I am sold on the idea that a hit on Gold will happen as the story puts on its rose colored glasses.

Gold "broke out" today and it trading at 1261. I added to my DZZ today at 10.46 on this breakout.


The VIX Back in its normal range




The DJIA has rallied from first of June note the relationship. Please note the MACD has rallied back up to the zero line. A rollover is a sell signal.




Mikey
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