Trading Plan for Dec. 15, 2010
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: