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Will the Shorts Cash In?

After being burned by not taking profits after sell-offs, the bears may do so today


Current Short Positions (stop losses in parentheses): TICC ($10.28), MCD ($77.74), CTXS ($64.13), MENT ($11.08), GS $(160.40), HRS ($44.99), HTZ ($11.78), KR ($22.36)

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

Bias: 73% Long

Economic Reports Due Out (times are EST): Retail Sales (8:30 a.m.), Empire State Manufacturing Survey (8:30 a.m.), Business Inventories (10 a.m.)

My Observations and What to Expect

* Futures are slightly up.

* Asian markets were mixed. European markets are rallying off their lows, but still remain mixed in their returns.

* The S&P 500 broke and closed below the 10-day average. Throughout the duration of the current trend, when this has happened, there has been a strong rally the following market session.

* The current trendline flattened out a little more — something that has consistently taken place throughout this rally. But no lower low has been established.

* S&P found support at the 20-day moving average, which it has not closed below since Sept. 1.

* On the weekly charts, the S&P held support at the 200-week moving average. A break below this moving average could signal a major move downward.

* We’ll have POMO every day this week. The full schedule can be found here.

* One big question on Wall Street is whether QE2 will represent a “sell-the-news” type of event.

* The volume from the previous two market sessions has been nothing spectacular.

* The main goal for the bulls is to hold the 20-day moving average; best-case scenario is close above the previous day’s highs at 1,210, or reclaiming the 10-day moving average.

* Throughout 2010, the bears have been burned numerous times by not taking profits after significant market sell-offs. This could lead to them being all too willing to do so today.

* The bears should aim to close below the 20-day moving average at 1,195, and the lows from Friday. Ideally, a close below 1,183 would cause a lot of problems for the bulls.

Actions I Will Be Taking

* May add one or two new positions to the portfolio should the market stabilize today.

* Stopped out of Monsanto Company (NYSE: MON), SPDR S&P 500 (NYSE: SPY), Netflix, Inc. (NASDAQ: NFLX) and, Inc. (NASDAQ: BIDU) on Friday.

* If the market closes below the 20-day moving average, I will close out my long positions as a result.

* Added Hertz Global Holdings, Inc. (NYSE: HTZ), Goldman Sachs Group Inc. (NYSE: GS), The Kroger Co. (NYSE: KR) and Harris Corporation (NYSE: HRS) to the portfolio on the 20-day moving average test.

* Follow me in the SharePlanner Chat-Room today for all my live trades, including my day trades.

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