Daily Form November 14, 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 NOVEMBER 14, 2007       05:31 ET

After losing more than eight percent last week the Nasdaq 100 (^NDX) was one of the major beneficiaries of a strong rally that was largely inspired by short sellers scrambling to cover positions in large tech and the financials. The index moved up four percent and came to rest close to the chart support/resistance level that marked the July top and the mid-September breakout level.

As with many dramatic short squeezes trading yesterday followed the classical trend day pattern of an absence of the usual intraday pullbacks and price rejection as the direction was more or less straight up with most indices ending at or very close to their highs. Trend days were also seen in Asian trading with the Nikkei 225 pushing ahead by 2.5% to finish more or less at its high for the day and the Hang Seng index surging by almost five percent to close at its high and almost back to its 20 day EMA.

With respect to the Nasdaq 100 index there could be further upward bias until we come back towards the 2110-2120 level which marks the area close to the 50 day EMA.


The S&P 500 (^SPC) also recorded a strong trend day with a gain of 2.9% which brought the index back to a close just above the 200 day EMA. Volume on the exchange traded proxy, SPY, was less than the average daily volume of 250m with less than 200 million shares being traded.

The banks and financials as anticipated in our weekend commentary were ready to mount an abrupt and vigorous rally and that came yesterday as many of the money center and investment banks surged ahead. The sector index (^BKX) should have further scope for upward movement but will face quite strong resistance at the 102 level.

TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY NOVEMBER 14, 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

IBM  International Business Machines Corp.  

IBM showed a relatively weak recovery yesterday and I would be looking to renew short exposure in the vicinity of $108 which lies just above the 200 day EMA.



BAC  Bank of America Corporation  

Bank of America (BAC) looks as though it could recover further towards $48, but as the chart suggests there will be strong overhead resistance at this level.



MBI  MBIA Inc.  

Despite a fifteen percent rise in trading yesterday MBIA Inc (MBI) still registered an inside day. For intraday traders there is scope for very strong intraday moves as the guarantors of structured products have attracted a lot of short sellers in recent weeks who are likely to be feeling more edgy after yesterday’s trading.



CRL  Charles River Laboratories  

Charles River Labs (CRL) has a bull flag formation with the appropriate volume characteristics.

Daily Form November 13, 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 NOVEMBER 13, 2007       06:06 ET

The Nasdaq Composite (^IXIC) fell back almost exactly to the 200 day EMA in yesterday’s trading as an early rally attempt from the bulls faded in the later part of the session. Technology still looks vulnerable to further erosion but a temporary recovery platform may have been attained yesterday as several stocks have come down to chart support levels which coincide with long term moving average support.

In terms of the larger picture more than fifty percent of the most liquid securities that form part of our daily monitoring have experienced drops of more than 5% during the last five trading days. One half of those (i.e. 25% of the total) have dropped more than 10% during the same period. Only thirteen stocks in that same sample have moved up by five percent or more in the last five days.

Several of last week’s short recommendations were harvested yesterday including CMI and CAM as discussed below.


The gold index (^GOX) shows the severe correction that is under way in relation to the precious metal and the mining stocks. The sector index has reached back to potential support at the 50 day EMA but realistically I would expect to see the breakout level closer to 165 on this index tested.

Despite some constructive moves in some of the financial stocks in yesterday’s trading the broker/dealer index (^XBD) closed at its lowest level since July 2006.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY NOVEMBER 13, 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

CMI  Cummins Inc.  

Cummins (CMI) fell out of the bearish pullback channel pattern after a failure at the $125 level as discussed here last week.



CAM  Cooper Cameron Corporation  

In a very similar fashion to the chart above Cameron (CAM) plummeted by almost ten percent out of a bearish flag pattern.



WY  Weyerhauser Company  

Weyerhauser (WY) still exhibits the bullish flag pattern cited last week and yesterday’s upward move on above average volume looks encouraging.



GRMN  Garmin Ltd.  

Garmin (GRMN) has been a very profitable short in recent sessions but has now reached a chart support level coinciding with the 200 day EMA where many short sellers will be looking to exit their positions.



ADBE  Adobe Systems Incorporated  

Adobe Systems (ADBE) completed the retreat to the 200 day EMA that was discussed yesterday.