Trading Plan for Dec. 27, 2010
Current Long Positions (stop-losses in parentheses): AIT (31.49), NTRI (20.98), MENT (11.84), AMZN (177.15), F (16.33)
Current Short Positions (stop-losses in parentheses): None
BIAS: 32% Long
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are are down moderately after China announced a surprise rate hike of 25 basis points.
Asian markets are mixed to slightly green, while European markets are showing a good amount of weakness.
I expect volume to be relatively light throughout the week.
Down-gaps in the market between Christmas and New Years have a strong propensity for being filled intra-day.
Chinese rate hike is and will be what has the biggest influence on the market today.
There is about 10 points of give back on the S&P from where it currently sits, and where the nearest level of support lies at 1247. Despite the pre-market weakness, we are still looking at opening up within that range, which keeps the markets and the short-term uptrend in tact without question.
Breaking support at 1247, and the 10-day moving average, could usher in short-term weakness in the market.
The Dollar continues to look confused making lower-lows and higher highs, with it currently in the process of trying to do the latter, yet again. A move above 81.53 (/dx) could be a glaring divergence for stocks in general.
The lows from 12/15 and 12/16 represent, in my opinion, the "higher-lows" in this recent market rally, and a break below them at 1232, would significantly stall this market's upward progression and potentially invite a new trend to the downside.
Below 1227, should we break it, the key support level for the S&P would become 1216 - the lows of previous consolidation.
For the bears - use the surprise Chinese rate hike announcement to push and close below the 1246 level, with a break below 1232 being the 'best-case scenario'.
For the bulls - hold short-term support at 1246, and fill the gap-down and rally higher, even if only a little bit.
Here Are The Actions I Will Be Taking: