Daily Form November 13, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY NOVEMBER 13, 2007       06:06 ET

The Nasdaq Composite (^IXIC) fell back almost exactly to the 200 day EMA in yesterday’s trading as an early rally attempt from the bulls faded in the later part of the session. Technology still looks vulnerable to further erosion but a temporary recovery platform may have been attained yesterday as several stocks have come down to chart support levels which coincide with long term moving average support.

In terms of the larger picture more than fifty percent of the most liquid securities that form part of our daily monitoring have experienced drops of more than 5% during the last five trading days. One half of those (i.e. 25% of the total) have dropped more than 10% during the same period. Only thirteen stocks in that same sample have moved up by five percent or more in the last five days.

Several of last week’s short recommendations were harvested yesterday including CMI and CAM as discussed below.

The gold index (^GOX) shows the severe correction that is under way in relation to the precious metal and the mining stocks. The sector index has reached back to potential support at the 50 day EMA but realistically I would expect to see the breakout level closer to 165 on this index tested.

Despite some constructive moves in some of the financial stocks in yesterday’s trading the broker/dealer index (^XBD) closed at its lowest level since July 2006.


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

CMI  Cummins Inc.  

Cummins (CMI) fell out of the bearish pullback channel pattern after a failure at the $125 level as discussed here last week.

CAM  Cooper Cameron Corporation  

In a very similar fashion to the chart above Cameron (CAM) plummeted by almost ten percent out of a bearish flag pattern.

WY  Weyerhauser Company  

Weyerhauser (WY) still exhibits the bullish flag pattern cited last week and yesterday’s upward move on above average volume looks encouraging.

GRMN  Garmin Ltd.  

Garmin (GRMN) has been a very profitable short in recent sessions but has now reached a chart support level coinciding with the 200 day EMA where many short sellers will be looking to exit their positions.

ADBE  Adobe Systems Incorporated  

Adobe Systems (ADBE) completed the retreat to the 200 day EMA that was discussed yesterday.

No comments: