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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, August 3, 2012

Central Banks Ambush Dollar send stocks higher


One day after Europe and two days after the Fed said nothing was happening now The Central banks massively sold dollars and US bonds  and the Euro rallied two cents. This was an old fashioned misdirection or should I say con game pulled by the US Fed and the European central banks.

The idea of trading these markets now is frankly absurd.  I will pass. The actions of the Central Banks have made it impossible to call a trend. Reality and price are miles apart.  They might as well say let them eat cake. The average guy is getting screwed and the rich are feasting on this charade. I am taking the day off and maybe more because the whipsaws are giving me whiplash.

My best guess is that they are setting up the Euro for a rally. That would mean a lower dollar and lower US bond prices. That would also mean higher commodity prices. The question is how much commodity and oil price increase are they willing to tolerate. The Euro flipped up short term but is still in a daily downtrend. The dollar is still up intermediate term but is down short term and daily.

US bonds are looking alot like the dollar.  I would assume that the Fed has been selling them as this bad economy talk has been going on.  If I had to bet I would bet against US bonds based on the news and realities of what they face now in Europe. I would also point out that the US balance the budget talks start again in January next year and I don't think it will be a pretty picture for US debt at that point.

Mikey
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