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Trading Plan for Dec. 15, 2010

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December 15, 2010 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): BIDU (105.80), CX (9.76), CERN (90.59)

Current Short Positions (stop-losses in parentheses)DTV (40.50)

BIAS: 14% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Consumer Price Index (8:30am), Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Industrial Production (9:15am), Housing Market Index (10am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

Futures are down moderately heading into the open.

Asian markets are seeing above average selling - as much as 2%, European markets are seeing moderate selling as well. 

After the FOMC Statement was released the market gave up all its gains and finished the day with a doji-candle/spinning top. 

Action from the markets the past two days, are not game changers, instead, it was like I have stated in previous reports, that consolidation is likely in the equation for now. The markets cannot go up forever, and in the midst of bull-runs, there has to be some opportunity for the markets to take a breather and that is what we are seeing right now. 

Following the Fed announcement, it usually takes the market 1-2 days to digest the report, for better or worse. Often times there is either a strong rally/decline the following day. 

I expect to see further consolidation in the near-term, before resuming the trend upwards. I also don't discount the possibility for some light selling  in the near-term either.

Despite the FOMC Statement yesterday, volume was unusually low. 

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.

For the bears - Need to push the market  below 1227 and ultimately 1216 on the S&P. The longer consolidation is allowed to go on, the less likely the bears will do anything substantial to these markets. 

For the bulls - HOLD, HOLD, HOLD the 1227 level. For now, anything else, is just cherries on top.

Here Are The Actions I Will Be Taking:

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