Daily Form July 26, 2007

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY JULY 26, 2007       07:13 ET

The Nasdaq Composite (^IXIC) has held up better than the other indices during the recent turmoil. Not only has the index managed to avoid any violation of its upward trend line since March but it has yet to test the 50 day EMA.

There is little doubt that technology shares have been the principal beneficiaries following the exodus from the more financially oriented sectors. While asset managers continue to support the high tech names, bullish sentiments may rescue the market from the more gloomy view emanating from the mortgage sector and, increasingly, the deteriorating environment for financing mergers and acquisitions.

Sustained momentum in the Nasdaq could frustrate the growing numbers of index put buyers and lead to another major short squeeze.

The Russell 2000 (^RUT moved down to tag the 200 day EMA in yesterday’s session but still failed to close above the opening price.

Unlike many Asian indices which have barely flinched during the recent turbulence in the US market, the UK’s FTSE index has been facing its own struggles during recent sessions. As this is being written the index is trading in the vicinity of 6430 which as can be seen on the chart represents an area where some chart support is to be expected.

There are some similarities in the technical characteristics between this UK index and the Russell 2000 above, but unlike the small cap US index the FTSE is still above the late February highs but only just.


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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GLW  Corning Incorporated  

The breakdown in the chart for Corning (GLW) suggests that further erosion towards the 200 day EMA at least is to be expected.

AXL  American Axle and Manufacturing Holdings Inc.  

The chart for American Axle (AXL) illustrates how easily a break of a key trend line can turn into an avalanche.

AMLN  Amylin Pharmaceuticals  

Amilyn (AMLN) powered ahead in yesterday’s session and broke above the recent trading high. The upward momentum may continue uanabated but a slight pullback or consolidation at this stage would probably provide an opportunity for latecomers to enjoy further gains.