Daily Form December 4, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY DECEMBER 4, 2007       05:22 ET

The new week did not produce a continuation of the bullish momentum that began to re-assert itself last week. The indices either ran in place or slipped back towards key moving average levels. As if to highlight the indecisive nature of yesterday’s trading the S&P 500 (^SPC) registered a fairly narrow range which almost qualified as an inside day. The index settled exactly at the 200 day EMA level and now sits ensconced between this and the 50 day EMA.

The banking sector index (^BKX) was rebuffed at the 50 day EMA level which as the chart illustrates tracks very closely with the descending trendline through the highs since early October. Amongst the many cross currents that face the sector and could well lead to some erratic price action is the mounting evidence that the interbank money markets are seizing up again as evidenced by nine year highs on the two month and three month LIBOR rates.

Nevertheless there is evidence, from volume analysis of many individual banking charts, of early accumulation which points to the fact that the institutional bias may have switched towards one of finding value in the sector, rather than shunning it in favor of the large technology stocks for example.


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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WFR  MEMC Electronic Materials  

The chart for MEMC Electronic Materials (WFR) reveals two striking shooting star candlesticks at the $78 level and a possible double top formation.

NOC  Northrop Grumman Corporation  

Northrop Grumman (NOC) climbed above two moving averages on decent volume and a continuation back towards the early November highs seems to be probable.

NTRS  Northern Trust Corporation  

Northern Trust (NTRS) has evidence of dissipating momentum and money flow.

GMKT  Gmarket Inc.  

GMarket (GMKT) appears to have reached the upper limits of a bearish pullback channel.

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