Trading Plan for October 22, 2010

Current Long Positions (stop-losses in parentheses): TICC (9.62), DTV (42.34), EOG (97.52), ESRX (46.42), AAPL (305.59), SHLD (72.95)

Current Short Positions (stop-losses in parentheses): SDS  (28.55)

BIAS: 56% Long

Economic Reports Due Out (Times are EST): No reports scheduled.

My Observations and What to Expect:

• Futures are trading flat. 
• Asian markets were mixed and European markets are seeing some mild selling. 
• S&P managed to make new intraday-highs yesterday, but couldn’t hold them – instead we have an indecisive doji candle. 
• We’ve had these doji candles quite a few times since bottoming in early September, but they marked signs of consolidation before advancing higher, not a topping pattern. 
• We also managed to hold the lows from Wednesday (very important).
• Filled the gap down from Tuesday nicely, yesterday. 
• Amazon.com (AMZN) earnings not having any significant impact on the indices in the early going (unlike Apple’s earnings). 
• Wouldn’t pull the plug quite yet on this market – bulls show that they are still willing to buy the dip yesterday. Right now, I believe what we are seeing is consolidation – not a topping pattern as some are so quick to say. 
• Bears need to keep the bulls from buying the dips every time there is a sell-off. Ultimately it needs to push the market back below Tuesday’s lows. Until then the bulls remain in control of this market. 
• Essentially we are a range-bound market since 10/12 between 1167 and 1190. 
• Some earnings reports due out before the bell: Verizon (VZ), Honeywell (HON), Ingersoll-Rand (IR), Schlumberger (SLB), Exelon (EXC). 

Actions I Will Be Taking:

• Stopped out of SHLD yesterday for a small profit – intraday reversal took me out after I moved my stop-loss up. 
• If we sell-off any further today, I will use it as an opportunity to load up on some new positions. 
• Tightened the stop-loss on DTV and SDS.
• Not hedged heading into the open.
• After reviewing all of my swing-trades for this year, I have discovered two things that I need to improve on: 1) I need to be more aggressive with profit taking, and not stay in positions longer than necessary, 2) Avoid new positions in aging market trends.