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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

Tuesday, June 15, 2010

Put Buster rally continues

DJIA 10370 +180 SPX 1140.40 +20.77 Nasdaq 2296.39 +52.36 VIX 25.96 -2.62 Gold 1234 +9.70 Silver 18.58 +.17 Oil 76.83 +1.71 RBOB(retail gas)2.1198 +.043 Nat Gas 5.18 +.18 DBC(Commodities)22.35 +.34 EURO 1.2346 +.0095 Dollar Index 86.23 -.566
EEM (Emerging Market Index)39.72 +.95 EWZ (Brazil)66.73 +1.76 FXI (China) 40.86 +.75
TLT (LT US Bonds)96.32 -.37 IEF (7-10 yr US Bonds)92.96 -.35 GDX(Gold Miners)51.02 +1.12 IYR (Real estate)52.04 +.87 (XLF Financials)14.70 +.25 XLE (Oil) 55.35 +1.31 XLB (Materials)30.94 +.57 XRT (Retail)40.55 +.36 XLK (Tech)22.19 +.50 XLV (Health care)29.59 +.38 XHB (Homebuilders)16.49 +.26

Stocks rallied Tuesday as the euro gained against the dollar after a number of successful European debt auctions eased investor concerns about the euro-zone's solvency crisis. Just in time for the June option expiration's and the end of the quarter window dressing. What is window dressing? I will address this in a future blog.

I expect this rally to hold or go higher until the end of the month. The VIX should be below 20 for me to initiate shorts. I will add to my DZZ on when Gold closes below 1200

Mikey
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