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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, July 16, 2010

Safe Haven Metal follows market lower

DJIA 10147 -211.64 VIX 27.62 +2.48 Gold 1189.50 -18.50 Oil 74.54 -1.08 USD 82.77 +.027 30 year 3.9328 -.0531 10 Yr 2.9323 -.0632
Mikey OB/OS index (80=OB 20=OS) 50

The DJIA is down over 200 points today and the price of Gold has declined by 19.20 to 1189.50 -18.50. Remember yesterday they told us that if it declined to 1185 it was a buy? It is now breaking a trend line drawn through the Feb 5 low the March 25 low and the July 7 low. The 50 day is at 1215 and was broken on July 1. They say that today is technical selling. I would agree the position looks technically weak in the near term. I, however, believe that on a close below 1180 that the top is set and the Bugs are trapped.

Here is the Gamekeeper line on Gold today:

Gold Slides on Technical Selling
Gold slipped to a one-week low on Friday as heavy fund selling of Comex futures pushed it through technical levels below $1,200 an ounce, with a retreat in safe-haven buying leaving little support for prices.

A fresh outflow from the world's largest gold ETF has undermined appetite for the precious metal, analysts said.

Spot gold [XAU=X 1188.25 -19.50 (-1.61%) ] slipped as low as $1,186.95 an ounce and was last bid around $1,190 Friday morning, against $1,207.75 late in New York on Thursday.

U.S. gold futures [GCQ0 1190.4 -17.90 (-1.48%) ] for August delivery was also down sharply.

Comex floor trader Jonathan Jossen said there was heavy selling of gold call options by a fund manager in early trade.

"There were sell-stops that set it off this morning," he said. "There has been pressure in the market for weeks now. Every time it gets up, the sellers come in."

Gold hit a record $1,264.90 an ounce in late June, after worries over the sovereign debt of some euro zone economies sparked buying of the metal as a haven from volatility in the currency markets. As those fears recede, it has slipped back.

"The story of Spain, Portugal and Greece is now calming down and people are taking their chips off the table, so we are seeing gold under pressure," said Jeremy East, global head of commodity derivatives trading at Standard Chartered.

"We are seeing (a return) to normality as people accept that markets are calming down."

Earlier on Friday the premium investors demanded to hold 10-year Spanish government bonds rather than German benchmarks fell following a successful auction the previous day.

The dollar meanwhile held near two-month lows against the euro [EUR=X 1.2919 -0.0009 (-0.07%) ], with the single currency benefiting from rising European money market rates and a deteriorating outlook for the U.S. economy.


I like the terminology, safe haven every time the mention Gold. Save-haven is attached at the hip to Gold. How can you get hurt in a safe haven??? The meaning of the word safe-haven is you can't lose. The Gamekeeper uses word association with price movement in a very clever way. The public actually believes the story now. This is a dangerous conclusion.

The stops on the GLD are at 114. I expect it to gap below that number trapping the longs.

Al: buying FAZ and BGZ I expect Gold to gap lower monday I also think that was the top yesterday in the market.

Mikey
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