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Trading Plan for Dec. 17, 2010

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December 17, 2010 – Comments (0) | RELATED TICKERS: SPY

Current Long Positions (stop-losses in parentheses): CX (9.76), CERN (90.59), AIT (30.65), NTRI (20.64), SNE (34.28)

Current Short Positions (stop-losses in parentheses)DTV (40.33)

BIAS: 29% Long

Economic Reports Due Out (Times are EST): Leading Indicators (10am)

My Observations and What to Expect:

Futures are are mixed.

Asian markets were flat/mixed, while European markets are showing some light selling. 

Today is options expiration (quadruple witching) and on such days, market action can become very erratic and unpredictable. 

Market showed a respectable bounce to the first wave of selling yesterday, as I thought it would, and bounced right off of the 10-day moving average and held its support just as it did most times during the Sept/Oct rally. 

S&P is set up nicely to make new rally highs in the coming days. 

All market indicators that I closely follow, including T2108 and NYSE Reversal Indicator, support the market rallying further in the short-term. 

Even so, the bulls are not far removed from the 1227 level, and that remains the support level that they must hold, 

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 - the lack of follow through, on Wednesday's selling, is troubling, and above all else, the bears will need to, at the very least, defend recent highs - failure to do so, could propel the S&P in to the 1260's. 

For the bulls - continue the  dip buying, like we saw yesterday, and extend the rally beyond recent highs, to avoid further consolidation in the markets. 

Here Are The Actions I Will Be Taking:

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