Daily Form December 20, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY DECEMBER 20, 2007       07:32 ET

It was another roller coaster ride in yesterday’s trading but within a relatively narrow range. The inside formation that is apparent on the chart for the Nasdaq 100 index (^NDX) as well as the doji pattern captures the indecisive flavor of recent sessions well. Options expiration seems to be an important contributory factor to the hesitation and the news-flow regarding CDO’s and related difficulties amongst the financial sector continues to weigh on sentiment. As I have discussed before the injection by sovereign wealth funds in the ailing US banking system is an excellent example of the interdependencies in the global economy and tempers my willingness to embrace the more apocalyptic scenarios being peddled by some pundits.

Over the last three sessions the Dow Jones Industrials index (^DJI) has closed within a very confined range and in close proximity to the 200 day EMA. I shall be looking for the logjam to break in the next two sessions and would not be surprised to see the bulls trying to run in the early going today buoyed by the strong Oracle report from late yesterday.


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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SII  Smith International Inc.  

Smith International (SII) managed to break free of an area of chart congestion on above average volume and a short term target of $74 is feasible.

T  AT and T Corp.  

AT&T has pulled back to probable support at the convergence of the two shorter term moving averages.

CRL  Charles River Laboratories  

Charles River Labs (CRL) has performed well following the bull flag that evolved in early November. The recent dissipation in momentum and money flow suggests that a period of consolidation is imminent

CTV  Commscope Inc  

Commscope (CTV) is at a potential breakout point but has to pull away from all three moving averages.

FFHL  Fuwei Films (Holdings) Co. Ltd.  

Following the suggestion from yesterday Fuwei Films (FFHL) delivered more than a six percent return and despite the strong move it still remains within the pullback pattern.

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