Current Long Positions (stop-losses in parentheses): BIDU (105.80), CX (9.76), CERN (90.59), VPHM (17.14), AIT (30.65)

Current Short Positions (stop-losses in parentheses): DTV (40.33)

BIAS: 22% Long

Economic Reports Due Out (Times are EST): Housing Starts (8:30am), Jobless Claims (8:30am), Current Account (8:30am), Philadelphia Fed Survey (10am), EIA Natural Gas Report (10:30am)

My Observations and What to Expect:

  • Futures are are mixed. 
  • Asian and European markets are mixed.
  • Yesterday was the first descent amount of selling that we’ve seen since this new buying wave began on 12/1. The last time we saw this selling was on 11/30. 
  • Recent market activity is helping the market work off its overbought conditions. 
  • 1227 on the S&P will be extremely important for the bulls to hold. A break below this level, would likely invite further selling.
  • Volume was above average yesterday, but will hold judgement on this and wait to see whether the event is isolated or new development indicating a wave of selling that may be on the horizon. 
  • Typically the first significant “down-day” in a upward trending market (trend beginning 12/1), doesn’t see to much further selling, instead the bulls will often times jump on this sell-off as an opportunity to add to their existing long positions. 
  • 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 – Show follow through on yesterday’s selling, and push the markets below 1227 (only 8 points away). 
  • For the bulls – Need to keep the selling at bay, and must hold the 1227 level on the S&P.

Here Are The Actions I Will Be Taking:

  • May add another 1-2 positions to the portfolio, but no more than that. 
  • Tightened my stop-loss in DTV slightly to 40.33 and VPHM to 17.14.
  • Added AIT and VPHM to the portfolio yesterday as breakout plays.
  • Stopped out of BIDU yesterday at $105.80 (thank goodness for stops) for a 5.3% loss.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

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