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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

Wednesday, August 11, 2010

"Quantitative Easing" underway

DJIA 10378.83 -265.42 VIX 25.39 +3.02 10 year 2.7003 +.0259 30year 3.9137 -.0025
Gold 1199.20 +2.00 Oil 78.02 -2.23 USD 82.36 +1.65

Days to option expiration 8

Economic Conditions: Negative -10.3
FED Easing Outlook uncertain

Mikey OB/OS index Neutral (80=OB 20=OS)---58
Mikey Confidence Index (Traders: confident = 100) 90
Ratio Put Premiums/Call Premium 65 ( Range 258 high 34 Low) High=Traders Bearish
% Advisory Service Bulls 38.9 Bears 33.3
Numbers are from the prior day close

Mikey Power Index (MPI)
BUY >60 SELL 50< Short 40<

Stocks 53 Bonds 52 Emerging Mkts 52
USD 49 Aussie 65 Euro 57 Brit Pd 60
Oil 62 Copper 62 Gold 38 Silver 34


Short ETF SCORE 666
DXD 55 DZZ 53 ZSL 43 DUG 47 EDZ 49 SMN 34 SKF 52 SRS 39 SZK 69
QID 54 SCO 39 RXD 53 TBT 48 SDP 31

Long ETF SCORE 743
DDM 41 UGL 38 AGQ 50 DIG 52 EDC 52 UYM 65 UYG 50 URE 59 UGE 74
QLD 45 UCO 62 RXL 61 UBT 52 UPW 42

Total Score +77

The DJI is down 224 this AM. the 10 yr bond is now 2.70 and the 30 year is at 3.96. The dollar index is up a nice 1.34. Oil is down 1.76 at78.49. Gold is unch at 1196 but should follow the market lower, The term Quantitative easing means blow it up and start over again. See my posts of last week.

Fed yesterday issued a weaker outlook at its FMOC meeting. To bad they were not reading Mikey for the past 6 months. Sources say that the Fed is going to buy Treasuries to force down rates. That is a complete load of crap. They are going to be selling their holdings regardless of what their balance sheet says. I talked about that over the past few blogs.

China import growth slows. Really, it has been slowing for quite some time. The timing of this news gave the boys an excuse to rally the dollar. Nobody believes this dollar rally you know with the Fed buying treasuries. Everything these jokers say is a lie. They then spin it to time the moves in the various markets to suit their needs.

The IBD TIIP poll shows Economic Optimism fell to 43.6 (below 50 is pessimistic). The IBD TIIP personal finance fell to 49.2 showing pessimism for the first time since June 2008.

Wholesale inventories rose a less than expected .1% in June and wholesale sales dropped .7%. This is evidence that firms have replaced the inventories that were used up during the slump.

Isn't it interesting how fast the news turns negative. You think they have been holding it back to suit their needs? Maybe it is time to step into reality for a while and let the Fed do its easing. That means a full on market decline followed by a full on decline in commodities and Gold.

What is the Fed going to do? The Fed is going to be selling bonds as the investment professionals tell the public to seek the safety if treasuries. They will also say that the Fed has used all of the arrows in its quiver and they are now powerless. That too is a load of crap.


Mikey
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