Trading Plan for Dec. 31, 2010
Current Long Positions (stop-losses in parentheses): OI (29.94), EMN (81.47), APOL (38.22), BTU (61.85)
Current Short Positions (stop-losses in parentheses): None
BIAS: 28% Long
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are down slightly.
Should be a relatively quiet day as a whole with extremely low volume levels.
Asian markets were down moderately, while European markets were down well over 1% on the day.
Watch the early morning weakness to see if the dip buyers jump in to try and propel this market higher - a consistent theme in this market.
Trading activity in the markets should be back to normal trading levels next week.
Trend-line continues to flatten out some due to the consolidation in the S&P over the last 5 days.
There is a strong possibility that we see another beginning of the month rally come Monday next week - almost all major rallies of late have occurred on those days - 8/2, 9/1, 12/1
S&P continues to hold its trend-line upwards, but is currently lacking any momentum, with the Christmas and New Year's holidays, there is little motivation to push this market higher.
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 what we deem as being reasonable.
There are 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, 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 - Push the market below the 10-day moving average for starters - we have yet to dip below this level, even on an intraday basis, the entire month and then below the 5-day consolidation on the S&P.
For the bulls - Buy the morning weakness and then break the highs from last Wednesday, and out of the 5-day consolidation pattern.
Here Are The Actions I Will Be Taking: