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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, October 21, 2010

The dollar at these levels is unacceptable

The dollar at these levels is causing inflation in developing countries and they a squawking. They way I see it the US is twisting arms and they want the currencies of these countries to rise. Until now they have had a free ride on the US consumers dime. That dime is running out and Uncle Sam can not longer afford to allow this game to continue.

I see this week that Intel is planning to build a plant in Oregon because of the cheaper dollar. The lower dollar is now starting to take away business from emerging countries where inflation is kicking in as the US economy deflates. It is getting cheaper to do business in the US than it is overseas. The political climate in the US is also fed (pun) up with this game of steal the from the US treasury.

The G-20 is meeting this week and big changes are in the wind. It is time for the dollar to rise or more pain will be inflicted until the emerging markets cry, well, uncle. US wants G-20 finance ministers to address trade imbalances and wants developing countries to let their currencies rise in line with market forces. If they don't market forces will do it for them.

Yield on Chinese 5 year bonds jumped to 2.97% highest yield since 2009 so the message is being received in China. South Korea: warns of a trade war and wants compromise on exchange rates. Japans PM Naoto Kan says the Yen's rise is extremely excessive, Brazil is raising taxes on its bonds to slow the rise in its currency and is pleading for an end to the currency wars. The arm twisting appears to be working.  That formula for the emerging countries to tie their currencies to the US dollar is starting to make inflation intolerable in their countries. The game is no longer working.

The standard investment advice is to invest in emerging countries and to invest in commodities and Gold. I think the dollar bashing is over and remember the whole world is short the dollar and long Gold and commodities. That strategy appears, to me, to be unwise under these circumstances.

 I am adding to my DZZ position at 9.05 and my ZSL position at 18.36. These are not recommendations they are trades for my account.
Mikey
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