Daily Form November 15, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY NOVEMBER 15, 2007       06:12 ET

Equity markets failed to follow through after Tuesday’s strong rally and the S&P 500 (^SPC) fell back below the 200 day EMA. Moreover the volume on the SPY proxy was notably higher than that achieved in Tuesday’s almost 3% rally. This lends supporting evidence to the view that much of what was seen on Tuesday was short covering by hedge funds and trading desks rather than new institutional buying.

One of the more surprising developments yesterday was the bearish comments from the Governor of the Bank of England that global share prices were out of alignment with deteriorating economic and financial conditions. Central bankers usually do not express such honest views about the state of the equity markets and one of the consequences of his downbeat assessment, that was especially targeted at the UK economy, was a slide of the pound sterling especially against the euro. This cross rate could have further to slide and the rate of sterling against the dollar may also be topping out.

The Nasdaq Composite (^IXIC) gave back almost one third of Tuesday’s gains and the index still faces the resistance of the 50 day EMA.

The sector fund for raw materials, XLB, is displaying some negative divergences and the performance of some of the industrial materials stocks as well as the shipping stocks suggests that fund managers are starting to take the possibility of a global economic slowdown more seriously.


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

SGP  Schering-Plough Corp.  

Schering Plough (SGP) appears to be in the midst of forming a bearish descending wedge pattern.

BEN  Franklin Resources  

Asset management company Franklin Resources (BEN) faces quite a strong hurdle as all three moving averages lie just above yesterday’s close.

KG  King Pharmaceuticals  

The chart for King Pharmaceuticals (KG) reveals a bullish flag pattern.

CMED  China Medical Technologies Inc.  

China Medical Technologies (CMED) could struggle to make much further upward progress following the high volume sell off on November 8th.

No comments: