Trading Plan for Dec. 6, 2010
Current Long Positions (stop-losses in parentheses): PH (78.95), HK (18.56), VMW (82.30), RRC (44.59), NVLS (31.78), FINL (18.60)
Current Short Positions (stop-losses in parentheses): DTV (41.12), V (77.61), GOOG (590.10)
BIAS: 11% Long
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are slightly negative heading into the Monday open.
Both Asian and European markets are mixed in trading.
1200 will act as support for the markets, while 1227 is the major battleground currently between the bulls and bears.
A pullback or at the very least some consolidation in the markets seems to be in the cards this week, before moving back up again. Typically pullbacks in a strong, trending market are very quick, and don't give bulls a huge opportunity to jump in at the lower prices they seek.
Intraday charts, particularly the 30min and 60min on the S&P show a very overextended market.
A break of the November highs could send the market up into the 1250's.
Volume has been average during this three day rally, with Friday's volume being well below the average - perhaps showing some exhaustion by the bulls.
The current rally has the makings of what we saw back on 9/1 which rallied for over two months.
Going forward I would expect the dip-buying to be back in play for traders.
Dollar failed to hold their trendline, and instead moved much lower instead.
For the bears - defend the resistance at the November highs and close below the Friday lows.
For the bulls - pullback/consolidation is a given in the near-term, avoid giving back too much of the day's gains.
Here Are The Actions I Will Be Taking: