Trading Plan for Jan 10, 2011
Current Long Positions (stop-losses in parentheses): BZ (7.95), MI (6.77), MWV (26.08),
Current Short Positions (stop-losses in parentheses): None
BIAS: 21% Long
Economic Reports Due Out (Times are EST): None
My Observations and What to Expect:
Futures are showing moderate strength heading into the open.
Asian and European markets are both showing weakness in trading today.
S&P setting up to open at or below the 10-day moving average, which is something that hasn't occurred at all during the duration of this rally going back to 12/1.
Should we trade below 10-day moving average, the next area of support to watch is 20-day moving average.
A break below 1251 would represent a "lower-low" in the market, and would greatly enhance the bearish cause going forward.
Volume was fairly steady and slightly above average last week.
Dip buying always is a strong possibility, even on days where the market is setting up for a strong push downwards. Be very careful when initiating new short positions in the afternoon, as that tends to be the best time for dip-buying to start ramping up.
Hanging-Man candle pattern on the S&P Friday could be an early indication that bullish enthusiasm may be waning in the short-term, and could bring forth some additional selling.
1276-8 is representative of the higher-high in this rally, and is providing short-term resistance.
The more long-term trend-line dating back to 9/1 currently has support at 1234.
For the bears - At the very least close the day below the 10-day moving average - ideally below Friday's lows.
For the bulls - Needs to see some dip buying come in and support this market - close above the 10-day MA, but by no means lose the 20-day MA.
Here Are The Actions I Will Be Taking: