Trading Plan for Dec. 29, 2010

Current Long Positions (stop-losses in parentheses): AIT (31.83), NTRI (21.22), MENT (12.01), AMZN (177.15), F (16.33), CERN (93.98), OI (29.94), EMN (79.67)

Current Short Positions (stop-losses in parentheses): None

BIAS: 36% Long

Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), EIA Petroleum Status Report (10:30am)

My Observations and What to Expect:

• Futures are are up slightly.
• No major or market moving reports due out today. 
• Asian markets on the whole were up, and European markets are showing moderate strength as well. 
• Volume continues to dry up, and will not see a pick-up until next week. 
• Since the open on Tuesday, the market has a nice intraday trend-line  on the 5 minute chart, with price currently sitting on that trend-line. 
• The S&P continues to consolidate/flag nicely at its highs, which is very bullish, and represents the market taking a ‘breather’ rather than any kind of distribution signs that some are saying. 
• The T2108 and the NYSE Reversal Indicator that I use, shows that the market has a lot of upward momentum remaining in it. Whereas more traditional indicators show the markets being well-overbought. For me, the latter doesn’t bother me all that much, since markets are able to run in overbought territory much longer than we deem as being reasonable. 
• Any kind of surge in the market between now and year’s end, where we rally, say 10 points on the S&P or more, will be a good opportunity to take profits off the table.
• Dip Buyers continue to provide support, thwarting short sellers from driving this market lower. 
• There is about 11 points of give back on the S&P from where it currently sits, and where the nearest level of support lies at 1247, where any sell-off within those parameters keeps the markets and the short-term uptrend intact without question.
• Breaking support at 1247, and the 10-day moving average, could usher in short-term weakness in the market.
• The dollar is once again looking a bit top-heavy and poised to move lower in the short-term, which should strengthen this market rally.
• The lows from 12/15 and 12/16 represent, in my opinion, the “higher-lows” in this recent market rally, and a break below them at 1232, would significantly stall this market’s upward progression and potentially invite a new trend to the downside.
• For the bears – use the seasonally light volume, to push markets lower, with the first target being 1247.
• For the bulls – break the highs from last Wednesday, and out of the 3-day consolidation pattern.

Here Are The Actions I Will Be Taking:

• I’m willing to add 1-2 new positions to the portfolio if the plays are there – watching GS for a possible breakout. 
• Increased the stop-losses in OI
• Added EMN at $83.03 at the open yesterday. 
• Closed out my position in F (1.2% loss), NTRI (1.4% loss) and AMZN  (0.3% loss) – all very small and well-contained. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.