Trading Plan for Dec. 16, 2010
Current Long Positions (stop-losses in parentheses): BIDU (105.80), CX (9.76), CERN (90.59), VPHM (17.14), AIT (30.65)
Current Short Positions (stop-losses in parentheses): DTV (40.33)
BIAS: 22% Long
Economic Reports Due Out (Times are EST): Housing Starts (8:30am), Jobless Claims (8:30am), Current Account (8:30am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am)
My Observations and What to Expect:
Futures are are mixed.
Asian and European markets are mixed.
Yesterday was the first descent amount of selling that we've seen since this new buying wave began on 12/1. The last time we saw this selling was on 11/30.
Recent market activity is helping the market work off its overbought conditions.
1227 on the S&P will be extremely important for the bulls to hold. A break below this level, would likely invite further selling.
Volume was above average yesterday, but will hold judgement on this and wait to see whether the event is isolated or new development indicating a wave of selling that may be on the horizon.
Typically the first significant "down-day" in a upward trending market (trend beginning 12/1), doesn't see to much further selling, instead the bulls will often times jump on this sell-off as an opportunity to add to their existing long positions.
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 - Show follow through on yesterday's selling, and push the markets below 1227 (only 8 points away).
For the bulls - Need to keep the selling at bay, and must hold the 1227 level on the S&P.
Here Are The Actions I Will Be Taking: