Daily Form November 6, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY NOVEMBER 6, 2007       06:49 ET

The Russell 2000 (^RUT) slipped further back in yesterday’s trading and reached down below the intraday low that was touched in Friday’s trading. I shall be watching to see how much support is provided in the 780 vicinity, an area of chart support/resistance dating back more than a year, as the under-performance of the small caps remains another concern for equity markets that have a lot of adversity to contend with at present.

The financial sector remained under pressure again in yesterday’s trading with the banking index (^BKX) losing another one percent, but this was surpassed by greater weakness in the investment banking sector (^XBD). In particular Goldman Sachs (GS) showed relative under-performance as it dropped almost five percent on fears that it may have greater adverse exposure to structured financial products than has hitherto been acknowledged. The mid August intraday low for the sector may be a near term target for the bears.

Charts of many retailers are showing distribution and the S&P Retail index (^RLX) closed at a new 52 week low.


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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CAM  Cooper Cameron Corporation  

Cooper Cameron (CAM) has a bearish pullback pattern with negative divergences on both the MACD and MFI chart segments.

RHT  Red Hat Inc.  

Featured in yesterday’s column as an example of a cup and handle pattern Red Hat (RHT) appears to be on the verge of validating the upside breakout pattern.

MON  Monsanto Company  

The chart for Monsanto Company (MON) is revealing negative momentum divergences.

WFR  MEMC Electronic Materials  

MEMC Electronics (WFR) has a pennant formation at an all time high with positive money flow characteristics.

HANS  Hansen Natural Corporation  

Hansen Natural (HANS) recently recorded a lower high and the MFI chart shows that distribution was taking place during the revisit to the level above $66.

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