Daily Form June 5, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY JUNE 5, 2007       06:36 ET

The Nasdaq Composite has recently been the index we have been focusing on but today we wanted to shift the focus sligthly towards the exchange traded proxy for the Nasdaq 100 index, QQQQ. One notable feature from yesterday’s trading was the sluggish volume as it barely registered one half of the average daily volume over the last fifteen sessions.

The chart segments for the MACD and MFI inidcators are also suggesting that the recent price performance has been diverging from the fading momentum and money flow dynamics.

Once again the US markets will have to assess the contunuing attrition in the Chinese market as the Shanghai index fell for the third straight session.

The Russell 2000 index (^RUT) eked out a small gain of 0.2% yesterday which placed it once again in record high closing territory. Yesterday’s range fitted entirely within Friday’s range and thereby created an inside pattern.

The remarkable strength in the retailing sector is well illustrated by the following chart of the sector fund, RTH, which over the last two sessions has clearly broken above the late February highs. In line with the rest of the market yesterday’s volume was also subdued.

Clive Corcoran will presenting an all day workshop on Pattern Analysis and Dissonance at the Heathrow Holiday Inn just outside London. The event will take place on Sunday June 10th and full details about the workshop and how to register may be found here.


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

PTV  Pactiv Corporation  

The chart for Pactiv Corporation (PTV) has a well defined downward sloping wedge formation which is often a precursor to a downside breakout. Yesterday’s tiny doji formation also shows a close just below the the two shorter term moving averages. We suspect that there will be a test of the 200 day EMA around $32.

VZ  Verizon Communications  

Verizon (VZ) has moved up quite steeply since breaking above its trading range in early May. There are negative divergences now appearing in momentum and money flow.

WOR  Worthington Industries Inc.  

Worthington Industries (WOR) has climbed an ascending pullback channel and there may soon be a resumption of the selling pressure that produced the gap down on May 24th.