Trading Plan for Jan 10, 2011

Current Long Positions (stop-losses in parentheses): BZ (7.95), GNK (14.37), MI (6.77), DF (8.58), LSI (5.91), 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:

• Unlikely to add any new long positions to the portfolio today, unless the market rebounds off of the lows. May initiate at least 1 short position if the market weakness persists throughout the day. 
• Raised the stop-loss in BZ. 
• Closed out DF on Friday at an avg. price of 9.66 (8.2% gain), GNK at 14.90 (0.9% gain), and LSI at $6.05 (1.5% loss). 
• Day-traded SSO off of the 10-day moving average on Friday for a 1% gain. 
• Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.