Trading Plan for Dec. 31, 2010

Current Long Positions (stop-losses in parentheses): CERN (93.98), OI (29.94), EMN (81.47), APOL (38.22), SCSS (9.07), BTU (61.85)

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

BIAS: 28% Long

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

• Futures are down slightly.
• Should be a relatively quiet day as a whole with extremely low volume levels. 
• Asian markets were down moderately, while European markets were down well over 1% on the day.
• Watch the early morning weakness to see if the dip buyers jump in to try and propel this market higher – a consistent theme in this market. 
• Trading activity in the markets should be back to normal trading levels next week. 
• Trend-line continues to flatten out some due to the consolidation in the S&P over the last 5 days. 
• There is a strong possibility that we see another beginning of the month rally come Monday next week – almost all major rallies of late have occurred on those days – 8/2, 9/1, 12/1
• S&P continues to hold its trend-line upwards, but is currently lacking any momentum, with the Christmas  and New Year’s holidays, there is little motivation to push this market higher.
• 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 what we deem as being reasonable.
• There are about 10 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 – Push the market below the 10-day moving average for starters – we have yet to dip below this level, even on an intraday basis, the entire month and then below the 5-day consolidation on the S&P.
• For the bulls – Buy the morning weakness and then break the highs from last Wednesday, and out of the 5-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 and the market recovers off of this morning weakness. 
• I continue to like how APOL is setup for a bounce in the short-term. 
• Increased the stop-loss in EMN and APOL.
• Added BTU yesterday morning at $63.83.
• Closed out my position in SCSS for a (3.9% loss), and CERN at breakeven.
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.