Daily Form June 21, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY JUNE 21, 2007       04:46 ET

The chart formation for the S&P 500 (^SPC) reveals the possibility that a lower high plateau may have formed following the recovery from the early June sell-off. The downthrust yesterday took the benchmark index as well as the smaller cap Russell 2000 (^RUT) index down by 1.4% and was on significantly increased voume from the previous two sessions.

The chart for the Dow Jones Utilities (^DJU) is showing the kind of technical trading patterns that should provide us with useful clues as to how asset allocators are responding to the changing interest rate environment. The recovery last week took us back almost exactly to where we expected - at the convergence of the two short term moving averages - and in yesterday’s action we headed back towards a test of the recent lows.

It will be instructive to monitor whether the upward slope to the lows of the last few sessions is about to be violated in coming sessions.

In yesterday’s commentary we featured, XLP, which represents the consumer staples stocks and commented on its relative weakness and declining momentum. The action yesterday highlights the fact that the sector appears to be on the verge of slipping below the second of two trend lines of potential support.


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

PKI  PerkinElmer Inc.  

Perkin Elmer (PKI) has a chart which typifies many large institutional favorites. A slightly lower recent high has been registered (at least from our current vantage point) and the price action appears to be at variance with the underlying dynamics which are detriorating.

SSCC  Smurfit-Stone Container Corporation  

Smurift Stone Container (SSCC) has penetrated a long standing line of resistance on the chart and providing that the overall market remains reasonably cooperative we should see further gains.

AMZN  Amazon.com Inc.  

Amazon (AMZN) appears to be over extended and vulnerable to a correction which could see it testing the 50 day EMA.

WFC  Wells Fargo and Company  

Wells Fargo (WFC), as expected, ran into resistance yesterday at the top of its range

LTD  Limited Brands Inc.  

Limited (LTD) managed to record a green candlestick, albeit a spinning top, despite yesterday’s sell off, and appears to have established a beach head above the line of recent resistance.