Daily Form October 24, 2007


Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
WEDNESDAY OCTOBER 24, 2007       06:26 ET

The Nasdaq 100 (^NDX) proved just how resilient this market can be as the tech heavy index has not only taken last Friday’s sell-off completely in its stride but, in a striking turnaround, it managed to close yesterday at a seven year high. Apple’s blowout numbers contributed to the 2.2% gain and the QQQQ proxy managed to underline the gain with volume of 162 million shares which was above the fifteen day moving average.

In addition to a series of upbeat earnings being achieved by several of the index’s constituents, fund managers are amassing large stakes in the large cap tech stocks also as a play on the insulation from dollar weakness enjoyed by this index’s multi-national companies. Investors are continuing to be shy of largely US based businesses that do not enjoy currency diversification in their revenues, and with the ongoing aversion to the financial sector, many of the leaders from the late 90’s are beginning to shine again.

A more restrained performance was seen from the S&P 500 (^SPC) which continued to recover from last week’s downside action and registered a 0.9% gain. The index could run into some chart resistance at the 1530 level which marks the 20 day EMA and above that at 1540 which represents last Thursday’s closing value.

From a technical perspective the Russell 2000 (^RUT) has behaved somewhat predictably in relation to specific chart levels.

After testing the area below the pivotal 800 level in early trading on Monday the index came back to close that session almost exactly at the 50 day EMA.

Yesterday’s one percent extension of the recovery brought the index to another challenge at 825 which marked the close preceding last Friday’s dive of more than three percent.


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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DOX  Amdocs Limited  

Amdocs (DOX) reveals a long lower tail formation where the intraday lows also coincided with the previous lows from August. The above average volume and doji star pattern could be pointing to a short term exhaustion in the selling.

CPHD  Cepheid  

The chart for Cepheid (CPHD) reveals a pullback pattern following the vigorous selling from October 15th and the climb within the channel since then has been marked by subdued volume. Yesterday’s 2.8% move up was notable for its very anemic volume.