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Buy the Dips This Week

Investors may get a brief opportunity to jump in at lower prices


Current Long Positions (stop losses in parentheses): VMW ($82.30), RRC ($44.59), FINL ($18.60)

Current Short Positions (stop losses in parentheses): DTV ($41.12), GOOG ($590.10)

Bias: 4% long

Economic Reports Due Out: None

My Observations and What to Expect

* Futures are slightly negative heading into the Monday open.

* Both Asian and European markets are mixed in trading.

* S&P 500 1,200 will act as support for the markets, while 1,227 is the major battleground currently between the bulls and bears.

* A pullback or at the very least some consolidation in the markets seems to be in the cards this week, before moving back up again. Typically pullbacks in a strong, trending market are very quick and don’t give bulls a huge opportunity to jump in at the lower prices they seek.

* Intraday charts, particularly the 30-minute and 60-minute charts on the S&P, show a very overextended market.

* A break of the November highs could send the market up into the 1,250s.

* Volume has been average during this three-day rally, with Friday’s volume being well below the average — perhaps showing some exhaustion by the bulls.

* The current rally has the makings of what we saw back on Sept. 1, which rallied for over two months.

* Going forward, I would expect the dip-buying to be back in play for traders.

* The U.S. dollar failed to hold the trendline, and instead moved much lower.

* The bears must defend the resistance at the November highs and close below Friday’s lows.

* If a pullback/consolidation occurs in the near-term, the bulls need to avoid giving back too much of the day’s gains.

Actions I Will Be Taking

* Will consider adding some additional long positions to the portfolio today.

* Closely monitor my short positions, especially Google Inc. (NASDAQ: GOOG) in light of Groupon bid rejection that may lift shares.

* Tightened the stop-losses in DIRECTV (NASDAQ: DTV), Range Resources Corp. (NYSE: RRC) and The Finish Line, Inc. (NASDAQ: FINL).

* Sold out of my Novellus Systems, Inc. (NASDAQ: NVLS) position in the pre-market, after a downgrade was received. No desire to risk losing my profits on the position.

* Closed positions in Petrohawk Energy Corporation (NYSE: HK), Parker-Hannifin Corporation (NYSE: PH) and Visa Inc. (NYSE: V). All except for V were for solid gains.

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

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