Daily Form September 11, 2007


Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY SEPTEMBER 11, 2007       03:32 ET

The S&P 500 chart reveals a spinning top formation that straddles the 200 day EMA. The candlestick pattern exemplifies the kind of indecisive nature of trading yesterday amidst a rapid alternation of sentiment based on the latest remarks from a Fed governor, upbeat analyst comments on some technology stocks and the continuing unease in the money markets. News that a British investor had built a stake of more than seven percent in Bear Stearns(BSC) did not inject as much pace into the stock as might have been expected and there were some that questioned whether the stake was a positive for the bank as the presence of the new stakeholder could act as a disincentive to a sovereign or strategic financial investor that could contribute more to the balance sheet.

Until the FOMC meeting next week (unless we get an "emergency" announcement beforehand) the market is likely to remain skittish and more disposed towards intraday trading strategies than suited to position traders.

The consumer discretionary sector is in the spotlight at the moment and the attrition in the retail index (^RLX) is bringing us closer to a retest of the lows registered in mid August.

The exchange traded sector fund XLY contains a cross section of stocks from across the consumer discretionary sector in addition to the retailers. Some homebuilders (LEN, PHM and KBH) are intermingled with media stocks (TWX and NYT) as well as hotels and restuarants. Volume and momentum do not appear to be that constructive and for sector players that are reckoning on a consumer slowdown this fund represents a good shorting vehicle. But as such the fund can be likely to squeeze plays especially as the August 16th low is approached.


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

MCD  McDonald"s Corporation  

MacDonalds (MCD) is looking constructive from a money flow point of view and the rising wedge pattern appears to be be pointing to a potential break above the recent congestion around the $50 level.

CRM  salesforce.com  

salesforce.com (CRM) looks set to test the $46 level which represents an area of resistance but the last three sessions have provided a break above all three moving averages on above average volume.

SCHN  Schnitzer Steel Industries Inc  

Schnitzer Steel (SCHN) appears to have registered a double top formation

The purpose of this mail is to offer you the chance to review the trading methodology, risk reduction strategies and portfolio construction techniques described at tradewithform.com
There is no guarantee that the trading strategies advocated will be profitable. Moreover, there is a risk that following these strategies will lead to loss of capital. Past results are no guarante of future results.
Trading stocks and CFD’s can yield large rewards, but also has large potential risks. Trading with leverage can be especially risky. You should be fully aware of the risks of trading in the capital markets. You are strongly advised not to trade with capital you cannot afford to lose. This mail is neither a solicitation nor an offer to buy or sell securities.

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