Daily Form October 17, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
WEDNESDAY OCTOBER 17, 2007       07:10 ET

Equities continued to slide yesterday as worries about the implications of credit market issues came to the fore and the slump in the banks continued. The Nasdaq Composite (^IXIC) fell back by 0.6% but positive earnings reports may bolster sentiment in the short term. In the intermediate term it would not be surprising to see a test of the breakout level from the first day of trading in October which saw the index supersede the previous multi-year highest close from mid July at 2720.

The S&P 500 (^SPC) recorded an 0.7% decline yesterday and has slipped back below the mid July highs but came to rest at almost exactly the level of the 20 day EMA.

The banking index (^BKX) discussed here yesterday as it dropped below two key short term moving averages on Monday continued downwards by another 2.1% in yesterday’s trading. This puts the mid August closing just below 102 in play. A failure to rebound at this level would be a bearish development for the overall market.


The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions. None of these setups should be seen as specifically opportune for the current trading session.
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C  Citigroup Inc.  

Citigroup (C) closed at its lowest level since July 2006. The chart is instructive for it shows a clear inability of the stock to rise above its 200 day EMA since the August sell-off

GMKT  Gmarket Inc.  

The long tails above the price action of the last few days shows a strong overhead resistance for GMarket (GMKT) and the stock could correct towards the $24 level.

WYNN  Wynn Resorts Limited  

Many stocks are revealing some rather striking negative divergences including Wynn Resorts (WYNN). Another that was mentioned in Monday’s column is Synaptics (SYNA).

BRLC  Syntax-Brillian Corporation  

Syntax-Brillan (BRLC) dropped back by more than five percent yesterday but this was on very subdued volume. The retreat to the 20 day EMA may have brought the stock back to a point where a renewal of the buying interest exhibited on October 5th could appear.

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