Daily Form October 9, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY OCTOBER 9, 2007       04:13 ET

The Columbus Day holiday and the closure of the bond market brought a subdued day of trading with well below average volume. After posting a new historic high in Friday’s trading the S&P 500 (^SPC) registered a small range inside day candlestick.

The Nasdaq 100 (^NDX) continues to be in the vanguard as it pushed further into multi-year high territory with a 0.6% gain.

The exchange traded fund FXI provides a useful proxy for the Chinese equities, and the recent performance has similar characteristics to that of the Hang Seng Index that was discussed here last week. Recent intraday volatility and large opening gaps suggests that some traders are becoming nervous about the almost uninterrupted upward progress that was made throughout September. Also evident on the ETF is negative money flow divergence during the most recent surge to new highs.


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.
For full details on time horizons, risk management and hedging techniques please visit http://www.tradewithform.com

PAYX  Paychex Inc.  

Paychex (PAYX) has pulled back from the two notable sell-off sessions on September 27 and 28 on very light volume and could be vulnerable to renewed weakness at the $43 level which is about two percent above yesterday’s close.

BRCM  Broadcom Corporation  

Broadcom (BRCM) surged ahead yesterday in a clear breakout from the recent trading range. The February/March highs just below $50 now present themselves as a new intermediate term target.

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