Trading Plan for Dec. 8, 2010
Current Long Positions (stop-losses in parentheses): VMW (83.70), APOG (11.56), BIDU (105.80), ESV (48.75)
Current Short Positions (stop-losses in parentheses): DTV (40.50)
BIAS: 22% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Quarterly Services Survey (10am), EIA Petroleum Status Report (10:30am)
My Observations and What to Expect:
Futures are mixed heading into the open.
Both European and Asian markets are mixed as well.
Yesterday's trading action was extremely disappointing for the bulls after gapping above the 1227 level, it sold-off in late afternoon trading, failing to hold the important price support level.
If you look at the weekly chart, we are essentially stuck in a sideways market pattern between 1186 and 1227 - a 41 point price range.
Volume was extremely high yesterday, despite finishing flat.
As a result of the action seen yesterday, we are now looking at a shooting star pattern, that can be a trend-killer. The last couple of times we have had one on the S&P, we've seen consolidation follow, which would seems like a high-possibility at this point.
I am on "high-alert" for a possible change in the short-term trend in this market. I recommend traders to the long-side show a lot of caution as well. While I am not yet willing to close out my long positions right now, I will not hesitate to close out my long positions should we see further selling into today.
The current rally on the daily charts still has the makings of what we saw back on 9/1 which rallied for over two months.
Dip buying will continue to be the name of the game for traders.
Dollar and gold seem to be once again trading inversely to each other. Dollar rebounded yesterday, but still did not manage to improve itself from a technical standpoint.
For the bears - hold on to the late day sell-off, and push the markets lower today. Doing so will cause the bulls to reconsider the legitimacy of this rally.
For the bulls - reclaim the 1227 level on the S&P and be sure to close above it.
Here Are The Actions I Will Be Taking: