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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, July 13, 2010

Getting close to a top

DJIA 10381 +151.85 VIX 23.70 -.73 Gold 1213 +14.30 Oil 76.83 +1.88 USD 83.77 -.63
Mikey OB/OS index 65 (80=OB 20=OS)

We are breaking above the 200 at 10370 and the 50 day at 10265 averages and the downtrend line drawn off the April high. The shorts have to start to think about covering now. The rally may take us to between 10500 and 10700. I am getting close to a sell point at this level. I would like to see the Mikey index go to 80 plus before I pull the trigger. That may be a little too ambitious I am not sure it will go that high this time. The last rally on June 21 topped out at 68.

Mikey
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