Trading Plan for Dec. 29, 2010
Current Long Positions (stop-losses in parentheses): AIT (31.83), MENT (12.01), CERN (93.98), OI (29.94), EMN (79.67)
Current Short Positions (stop-losses in parentheses): None
BIAS: 36% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), EIA Petroleum Status Report (10:30am)
My Observations and What to Expect:
Futures are are up slightly.
No major or market moving reports due out today.
Asian markets on the whole were up, and European markets are showing moderate strength as well.
Volume continues to dry up, and will not see a pick-up until next week.
Since the open on Tuesday, the market has a nice intraday trend-line on the 5 minute chart, with price currently sitting on that trend-line.
The S&P continues to consolidate/flag nicely at its highs, which is very bullish, and represents the market taking a 'breather' rather than any kind of distribution signs that some are saying.
The T2108 and the NYSE Reversal Indicator that I use, shows that the market has a lot of upward momentum remaining in it. Whereas more traditional indicators show the markets being well-overbought. For me, the latter doesn't bother me all that much, since markets are able to run in overbought territory much longer than we deem as being reasonable.
Any kind of surge in the market between now and year's end, where we rally, say 10 points on the S&P or more, will be a good opportunity to take profits off the table.
Dip Buyers continue to provide support, thwarting short sellers from driving this market lower.
There is about 11 points of give back on the S&P from where it currently sits, and where the nearest level of support lies at 1247, where any sell-off within those parameters keeps the markets and the short-term uptrend intact without question.
Breaking support at 1247, and the 10-day moving average, could usher in short-term weakness in the market.
The dollar is once again looking a bit top-heavy and poised to move lower in the short-term, which should strengthen this market rally.
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.
For the bears - use the seasonally light volume, to push markets lower, with the first target being 1247.
For the bulls - break the highs from last Wednesday, and out of the 3-day consolidation pattern.
Here Are The Actions I Will Be Taking: