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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

Thursday, July 15, 2010

Safe Haven is the word they use now for Gold

Gold Rises on Safe Haven Status

Gold rose on Thursday, benefitting from a retreat in risk appetite after soft U.S. economic data knocked stocks, the dollar and industrial commodities lower.

Spot gold [XAU=X 1207.85 0.35 (+0.03%) ] was last bid around $1,208 midday Thursday, against $1,207.50 late in New York on Wednesday.

U.S. gold futures [GCQ0 1208.1 1.10 (+0.09%) ] for August delivery also rose.

Stock markets weakened in Europe and the United States after a lower-than-expected reading from the Philadelphia Federal Reserve's index of business conditions in the U.S. Mid-Atlantic region pointed to sluggish U.S. growth.

Concerns over the economy tend to support gold, but the precious metal remains in a narrow range.

"Bargain hunters want to buy it around $1,200, and (at) $1,217, profit takers are all lined up," said Afshin Nabavi, head of trading at MKS Finance.

"Overall a break above $1,225 should trigger more interest from the buyers who are currently on the sidelines. On the downside, $1,200 to $1,185 should bring in some physical related buying." (Hey its a win win if it goes up to 1225 they buy if it goes down to 1185 they buy)..well I guess that is why it is a safe-haven...you can't lose.
On the currency markets, the euro [EUR=X 1.2898 0.016 (+1.26%) ] extended gains against the dollar, nearing $1.29 for the first time in two months, after data showed the Philadelphia Federal Reserve's business conditions index fell in July.


I pointed this out yesterday they are not talking about Gold as an inflation hedge but a safe haven. It is almost like putting the money in the bank when you want to be safe. I promise you this. The people who are putting their money in Gold because they want a safe-haven are going to find out just how the safe it is.

These are the same folks that told people to invest in real estate in 2005 and the people who told you to invest in the stock market in 2007 and to invest in oil in 2008. The reality is that the very people who got nailed in the Stock Market and Oil and Real Estate are going to have the exact same thing happen to them in Gold. Those were all safe-havens too. Think about it.

Mikey
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