Trading Plan for Dec. 14, 2010
Current Long Positions (stop-losses in parentheses): BIDU (105.80), CX (9.76)
Current Short Positions (stop-losses in parentheses): DTV (40.50)
BIAS: 7% Long
Economic Reports Due Out (Times are EST): Producer Price Index (8:30am), Retail Sales (8:30am), Redbook (8:55am), Business Inventories (10am), FOMC Meeting Announcement (2:15pm)
My Observations and What to Expect:
Futures are up slightly heading into the open.
Asian markets were once again mixed while European markets are slightly in the negative in trading. .
We had another intraday sell-off in the S&P at the close, similar to what we saw back on 12/7. The sell-off doesn't appear to be indicative of a major shift in the behavior of the market and still fits nicely within the context of the existing trend upwards.
Today the Fed releases its FOMC statement, which I will post upon its release. Last time they spoke, there was an unusual amount of volatility (extreme moves in gold and dollar) prior to the announcement. So beware.
It is very difficult to play the Fed announcement as there is numerous head fakes upon the release of the FOMC statement, and any move initially should be viewed through skeptical lenses.
Of late, most FOMC Statements have been embraced ultimately by the bulls - but sometimes that embrace doesn't occur until the day after the announcement. Prior to the announcement, price movements typically are contained within a narrow range.
1227 could be back in play today if the FOMC statement is not well received.
As noted yesterday, while we still have overhead room to the upside for the market to still run, I wouldn't be overly surprised if we consolidated a bit at current price levels.
Volume continues to come in at below average.
Below 1227, should we break it, the key support level for the S&P would become 1216 - the lows of previous consolidation.
Dip buying will continue to be the name of the game for traders.
Dollar looks more and more like it is preparing for another leg down - on the verge of a lower-low.
For the bears - Use the FOMC statement to instantly drive these markets lower - no better opportunity, should Bernanke and Co. include in the statement language that isn't well-received by the street. A close below 1227 is a must for them, to thwart the bullishness of the markets.
For the bulls - HOLD, HOLD, HOLD the 1227 level after the FOMC release. Anything else is just cherries on top.
Here Are The Actions I Will Be Taking: