Trading Plan for Dec. 15, 2010

Current Long Positions (stop-losses in parentheses): BIDU (105.80), CX (9.76), CERN (90.59)

Current Short Positions (stop-losses in parentheses): DTV (40.50)

BIAS: 14% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Consumer Price Index (8:30am), Empire State Manufacturing Survey (8:30am), Treasury International Capital (9am), Industrial Production (9:15am), Housing Market Index (10am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

• Futures are down moderately heading into the open.
• Asian markets are seeing above average selling – as much as 2%, European markets are seeing moderate selling as well. 
• After the FOMC Statement was released the market gave up all its gains and finished the day with a doji-candle/spinning top. 
• Action from the markets the past two days, are not game changers, instead, it was like I have stated in previous reports, that consolidation is likely in the equation for now. The markets cannot go up forever, and in the midst of bull-runs, there has to be some opportunity for the markets to take a breather and that is what we are seeing right now. 
• Following the Fed announcement, it usually takes the market 1-2 days to digest the report, for better or worse. Often times there is either a strong rally/decline the following day. 
• I expect to see further consolidation in the near-term, before resuming the trend upwards. I also don’t discount the possibility for some light selling  in the near-term either.
• Despite the FOMC Statement yesterday, volume was unusually low. 
• Below 1227, should we break it, the key support level for the S&P would become 1216 – the lows of previous consolidation.
• Dip buying will continue to be the name of the game for traders.
• For the bears – Need to push the market  below 1227 and ultimately 1216 on the S&P. The longer consolidation is allowed to go on, the less likely the bears will do anything substantial to these markets. 
• For the bulls – HOLD, HOLD, HOLD the 1227 level. For now, anything else, is just cherries on top.

Here Are The Actions I Will Be Taking:

• Will continue to be conservative with adding new long positions to the portfolio. Would like to first see the markets breakout of consolidation. 
• Further strength in the market will likely stop me out of DTV (I’ve been saying this for days and it has yet to happen!).
• Added CERN to the portfolio yesterday as a breakout play. 
• BIDU will likely be stopped out at 105.80 (original stop) if the market follows through on yesterday’s late day sell-off. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.