This past week the markets did move slightly higher on Monday then traded flat until the last 30 minutes of trading on Thursday 31st when they turned down. The US capital gains tax laws will be changing and taxes will be significantly higher in 2010 so there was some last minute selling in order to avoid the higher taxes. We expect volatility to be high on Monday and Tuesday due to portfolio realignments and additional selling from those that wanted to avoid paying taxes until 2011.

The daily indicators have turned down but have not confirmed a change in trend. The long term indicators are all bullish so until they turn bearish 'the trend is your friend' and dips should be bought. The markets may start the week off by moving down quickly but we are looking for a quick bounce to follow any short term weakness.

This being the first weekend of the new year we couldn't help watching, listening or reading the market analysts on tv, on the radio and on various blogs. Most of the commentators on tv and on the radio appear to be very bullish and are pushing the usual 'buy, buy, buy, the market is going up' and many of the blogs are at the other extreme telling you to 'sell, sell, sell, the market is going to drop like a rock'. Exaggeration sells; no one will tune in to these people day after day if they say the market is going sideways and will close the year where it started. What good does it do you if a commentator predicts that the market is going to go up 20% or go down 20% if on the way there it drops 50% or goes up 50%? Most traders will sell when they can no longer take the pain, so even if these commentators guess correctly, they are the only people that benefit as they can brag about it for the next 5 years.

We seriously believe that the only way to be a consistently successful trader is to create a trading plan and stick to it. Our trading plan calls for us to trade with the trend, to use good money management rules and to always have an entry and stop plan prior to entering any trade. We use support lines, resistance lines, trend lines and patterns to select the stocks that offer the best risk to reward potential in the shortest amount of time. We also analyse long term charts to get a big picture of the market we are trading in order to create different scenarios of what we will do if this happens or if that happens. These scenarios are not predictions they are simply part of the planing process so that we are not trying to make decisions after the fact. We mentioned one possible scenario in the SPX index area for our subscribers this weekend.

The compounding of consistent profits is the best way to increase the value of a portfolio, but it does not happen over night. It takes time, experience, education and the discipline to follow a plan. Trading the markets is a business where 85% of traders give up or go broke because they don't create or could not follow a plan. It takes 21 days to make something a habit, most people will quit by the 17th day. Using an easy to follow trading plan makes embedding good practice easier.

The Nasdaq Composite Index First support is at - 2250, 2200, and 2176. Resistance is at 2350 and 24000.

Standard and Poors SP-500 index We expect a quick bounce to follow any short term weakness. First support is at - 1112,1095 and 1084. Resistance is at 1121, 1131, 1200 and 1250.

The Dow Jones Industrial Averages Index Support is at - 10265, 10230 and 10080. Resistance is at 10500, 10800 and 11037. .

The KBW Bank Index Support is at - 41.70 resistance is at 43.50, 44.50 and 45.50 The banking index has made a double bottom but was unable to break above the down trend line with the low volume this past week. A break above the line will be confirmation that the move is real. If it does break above the trend line it may come back down to test the break out, that will be the best buying opportunity for the real move up.

GOLD - via the GLD Gold is bouncing around in a tight range, if it moves up we believe it will fail at the the 50 day sma or at most the 20 day sma. Longer term the next few months we are bearish on gold and believe a test of 100 or even 94 is a definite possibility. Support is at 105. Resistance is at 110, 111.50 and 114.

OIL (light sweet crude) Oil is now sitting just under the down trend line and will more than likely move sideways or slightly down before turning back up.

The US Dollar (Dollar Index ) The U.S. Dollar has managed to stay above support and can work off the overbought conditions if it remains in a sideways range but we believe it can easily move down to test the 76.50 area before turning back up. We are bullish on the dollar first target price is in the 79.50 area.