Daily Form October 10, 2007

TRADE WITH FORM
Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
WEDNESDAY OCTOBER 10, 2007       06:03 ET

As I was scanning the charts this morning I was struck by the number of stocks that seem to be in vertical ascent patterns (two of which are mentioned below) and also the absence of any clearly defined setups on the short side. Yesterday’s late rally, based supposedly on a benign interpretation of the FOMC minutes that were released, is convincing me that all of the sceptics are being systematically converted to the bullish case and now are involved in a case of manic catch up.

The bears are either in early hibernation or are biding their time and sensing that there will be a better opportunity, as the market becomes really over-extended, to ambush the latecomers to this extraordinary "V" shaped recovery.


The Nasdaq 100 (^NDX) moved higher yesterday and has now completed an almost twenty percent recovery since the mid August lows. The fact that the index has, over the last few sessions, been above the upper 50 day volatility band, in a period that covered much greater than typical market volatility, suggests that we are currently experiencing extreme moves to the upside to match the extreme moves to the downside in August.

The S&P Midcap index (^MID) is within a few sessions (perhaps even today) of joining many other indices that have broken to new historic highs.

TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY OCTOBER 10, 2007



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

DRYS  Dryships  

Dryships (DRYS) has more than doubled since the mid August low and yesterday saw another ten percent being added to the parabolic ascent pattern.



GS  The Goldman Sachs Group Inc.  

Since peeking below $160 in August Goldman Sachs (GS) almost peeked above $240 in yesterday’s trading. No matter how much adversity was being presented to the investment banks during the August turmoil, the fifty percent move in six weeks speaks volumes about the resilience of Goldman as a company but also how much the market is coming to rely upon a cooperative central bank coming to the rescue of the financial economy.



GRMN  Garmin Ltd.  

After reviewing all of these super bullish charts I hesitate to mention Garmin (GRMN) on the short side. Just a week ago "investors" seemed to be viewing the company as being in trouble following business developments that raised concerns about increased competition.

In more typical market circumstances I would be looking to get short again not far from where the stock closed yesterday, but, in these peculiarly euphoric times, I shall probably sit on the sidelines unless I see an intraday price avalanche developing.

Daily Form October 9, 2007

TRADE WITH FORM
Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY OCTOBER 9, 2007       04:13 ET

The Columbus Day holiday and the closure of the bond market brought a subdued day of trading with well below average volume. After posting a new historic high in Friday’s trading the S&P 500 (^SPC) registered a small range inside day candlestick.


The Nasdaq 100 (^NDX) continues to be in the vanguard as it pushed further into multi-year high territory with a 0.6% gain.

The exchange traded fund FXI provides a useful proxy for the Chinese equities, and the recent performance has similar characteristics to that of the Hang Seng Index that was discussed here last week. Recent intraday volatility and large opening gaps suggests that some traders are becoming nervous about the almost uninterrupted upward progress that was made throughout September. Also evident on the ETF is negative money flow divergence during the most recent surge to new highs.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY OCTOBER 9, 2007



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

PAYX  Paychex Inc.  

Paychex (PAYX) has pulled back from the two notable sell-off sessions on September 27 and 28 on very light volume and could be vulnerable to renewed weakness at the $43 level which is about two percent above yesterday’s close.



BRCM  Broadcom Corporation  

Broadcom (BRCM) surged ahead yesterday in a clear breakout from the recent trading range. The February/March highs just below $50 now present themselves as a new intermediate term target.

Daily Form October 8, 2007

TRADE WITH FORM
Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
MONDAY OCTOBER 8, 2007       05:59 ET

The S&P 500 (^SPC) closed at an all time high in the aftermath of Friday’s employment report. Traders seem to be favorably disposed to almost all economic news at present and the enthusiasm shown for the small cap stocks, which saw the Russell 2000 (^RUT) make an impressive 1.9% gain on Friday, strengthens the intermediate outlook for equities.


While equity markets found reasons to celebrate the employment data, Treasury traders found a reason to sell US government bonds across the yield spectrum. The yield on the ten year note moved up by 12 basis points and the 4.75% level now seems to be in play. Reviewing the longer term charts there is clear resistance to yield attrition at the 4.4% level and the next target may well be a re-testing of the psychologically significant parameter of five percent.

Many indices are now in record high territory again but the Dow Jones Transport index (^DJT) has some catching up to do as it contemplates a record close of 5446 on July 19th. Friday’s strong performance with a 3.3% gain enabled the index to break free of all three moving averages and once again underlines the breadth of support for the current bullish bias.

TRADE OPPORTUNITIES/SETUPS FOR MONDAY OCTOBER 8, 2007



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

RHI  Robert Half International Inc.  

Robert Half International (RHI) moved decisively above the 50 day EMA on heavy volume and I would be targeting $35 during the next few sessions.



IP  International Paper Company  

As discussed in Friday’s commentary International Paper (IP) was presenting a rising wedge formation, which often precedes an upward price breakout. The stock moved up 2.3% in Friday’s trading on almost twice the average daily volume and I would suspect that there is further upside potential.



EBAY  eBay Inc.  

EBAY should be monitored for further evidence that a correction might be imminent.



SYNA  Synaptics Incorporated  

Synaptics (SYNA) is in the process of forming a bearish flag formation and I would be looking for an entry opportunity on the short side in the region of Friday’s high of $47.42.