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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

Monday, August 23, 2010

Jackson Hole

DJIA 10174 -39.21 VIX 25.66 +.17 10 year 2.57 -.04 30 year 3.63 -.03
Gold 1223 -6.80 Oil 72.81 -.14 USD 72.81 -.23
Days to option expiration 19

Economic Conditions: Negative -10

Mikey OB/OS index Elevated ---57 (80=OB 20=OS)
Mikey Confidence Index (Traders: Neutral) 61
Ratio Put Premiums/Call Premium Elevated 1.00
% Advisory Service Bulls 36.7 Bears 31.1 Moderately Bullish
US Mutual Funds cash position 3.5% Low cash (high 6.2% Low 3.3%)
Numbers are from the prior day close

Mikey Power Index (MPI)Uptrend 60+ Sell 50- Short 40-

Stocks 37 Bonds 81 Emerging Mkts 25 China 32 Brazil 34
Oil 25 Nat Gas 13 Copper 50 Gold 55 Silver 46
USD 66 Aussie 35 Euro 24 Brit Pd 40

Short ETF SCORE 853
DXD 66 DZZ 40 ZSL 50 DUG 60 EDZ 70 SMN 53 SKF 70 SRS 72 SZK 83
QID 77 SCO 73 RXD 55 TBT 20 SDP 64

Long ETF SCORE 631
DDM 38 UGL 52 AGQ 43 DIG 32 EDC 28 UYM 57 UYG 35 URE 30 UGE 71
QLD 24 UCO 21 RXL 62 UBT 77 UPW 38
Total Score --222(Positive number indicates uptrend)

Summary: Stocks, Emerging Markets, Oil, Euro, Aussie, Tech, Utilities, Real estate, Banks have weak MPI power numbers below 40.


The Fed meets in Jackson hole this week to decide to quantitatively ease or not. Gee what will they do? The markets says that they need to and fast.

Mikey
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