Daily Form February 29, 2008

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FRIDAY FEBRUARY 29, 2008       03:07 ET

Yesterday’s session was a real tussle between the bulls and the bears as key levels on the S&P 500 were tested by index futures traders. A couple of times it appeared as though the critical 1365 might be breaking which could have caused energetic selling, but at the end of the session the index avoided a meltdown and the bulls live to fight another day.

We are still essentially range bound but the thrashing around is becoming a little more disciplined. The Nasdaq 100 (^NDX) also was a lot less lively and held up well despite the thorough testing of the S&P 500.


The broker/dealer sector (^XBD) was one of the worst hit sectors yesterday with a more than three percent decline. As suggested earlier this week and hinted at in Bernanke’s testimony there is a growing realization that bankers are less likely to return to their enthusiastic pre-August 2007 modus operandi regarding structured credit instruments.

Chairman Bernanke’s testimony in which he has to provide the requisite gravitas as an inflation fighter took place against the backdrop of crude oil now breaking above $102, gold hitting all time highs and the euro currency continuing its surge well beyond $1.50.

The gold and silver index (^XAU) could be on the verge of a parabolic ascent pattern.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY FEBRUARY 29, 2008



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

CTSH  Cognizant Technology Solutions  

My apologies for including amongst the potential setups in yesterday’s commentary a very outdated chart for Global Santa Fe (GSF) which no longer is listed as a stand-alone stock. It somehow slipped through the pattern detection program that scans hundreds of charts and I confess to being embarrassed about not realizing that I was writing about a pattern from three months ago!

Cognizant Tech (CTSH) has a flag like pattern and, with yesterday’s tiny doji star pattern, the stage appears to be set for a move upwards towards at least the 200 day EMA.



STX  Seagate Technology  

After running into resistance at its 200 day EMA Seagate Technology (STX) succumbed to the expected selling pressure and dropped below all three moving averages on increased volume. Momentum and money flow suggest that a further tradable correction is under way.

Daily Form February 28, 2008

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THURSDAY FEBRUARY 28, 2008       05:34 ET

Despite a lot of attention being focused on the testimony of the Federal Reserve chairman before the House Financial Services Committee, which included a barely disguised promise to reduce short term rates by another 50 basis points, there was little consequential movement in equities.

The Dow Jones Utilities index (^DJU) looks slightly more prone to a breakout downwards from its recent congestion pattern than some of the other broad indices.


Movements in prices of the utilities and gold are typically negatively correlated owing to their different reaction to inflationary concerns. As the price of the precious metal makes historic highs and moves closer to the $1000 per ounce target, the gold and silver index (^XAU) made a marginally improved all time high in yesterday’s trading.

As discussed last week the Sao Paulo Bovespa index (^BVSP) is also on the verge of an all time high.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY FEBRUARY 28, 2008



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

GSF    

Global Santa Fe (GSF) has negative momentum divergences that add emphasis to the rather bearish shooting star formation that was accompanied by very heavy volume.



AVID  Avid Technology Inc  

Avid Technology (AVID) has risen steadily in a channel since the early February sell-off but yesterday’s break above the 50 day was not accompanied by convincing volume.

Daily Form February 27, 2008

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WEDNESDAY FEBRUARY 27, 2008       06:53 ET

Traders did not have far to look for excuses to sell equities yesterday but, despite some very weak data, the market continued to rally. Volume needs to be more substantial to make the bullish case more compelling and there is a suspicion that the market is rising in part because the short sellers seem to have retired to the sidelines.

Several global indices, in addition to those in the U.S. have now risen to fairly critical threshold levels where we have almost broken through the triangular patterns which have characterized trading over the last several weeks.

The S&P 500 (^SPC) reached up and tagged the 50 day EMA and is now poised for a run above 1380 towards 1400 which would propel us beyond the congestion pattern and really put the bulls to the test.

Volume would have to kick following such a breakthrough in order for me to be convinced that we are witnessing a decisive shift in market dynamics rather than a potential trap for the unwary.


The broker/dealer index (^XBD) has been meandering just below key moving average resistance and yesterday registered a spinning top candlestick formation after appearing to penetrate resistance.

A leading financial regulator in the UK has suggested that the banking industry, even once it moves beyond the current adversity, will almost certainly not be reverting to the business model of originating loans and then distributing them through securitizations and CDO’s. If this analysis is correct this would pose a threat to the very lucrative areas of financial engineering that have contributed in a big way to the profitability of the major investment banks.

The Hang Seng index (^HSI) rallied strongly in overnight trading and came to rest very close to the expected resistance level where the 200 and 50 day EMA’s are aligned. As noted before this index is always worth monitoring as a barometer to the speculative sentiment of the major hedge funds, and if we get a break above the formidable overhead resistance, this would suggest a more positive outlook across the board for global equities.

TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY FEBRUARY 27, 2008



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

LAMR  Lamar Advertising Company  

In yesterday’s commentary I cited Lamar Advertising (LAMR) on the long side and even after the rise of 4.7% I suspect that there is further to go and I would keep to yesterday’s suggested target of $44.



MTH  Meritage Homes Corporation  

Meritage Homes (MTH) produced a shooting star formation with a very long upper tail as it ran up to the $18 level where it has turned back three times already.



CI  CIGNA Corporation  

The recent chart pattern for Cigna (CI) and the uptick in volume yesterday suggests a near term price target in the vicinity of $50.



PRU  Prudential Financial Inc  

I would favor a short position on Prudential (PRU) as the ascending channel following the sell-off earlier in the month appears to be running up to a rejection level.

Daily Form February 26, 2008

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TUESDAY FEBRUARY 26, 2008       03:54 ET

The S&P 400 Midcap (^MID) registered one of the more impressive performances in yesterday’s rally. A move of two percent outpaced the progress of 1.4% made by its larger cap sister index and also brought a close above the 50 day EMA.

The index now faces quite noticeable chart resistance at 820 and for the bulls to seize the initiative provided by the upbeat sentiment about the probable rescue of Ambac, the momentum will need to be sustained to propel this index, along with others, firmly beyond the triangular patterns that still prevail.


While most attention is currently focused on the fate of equities as they wrestle with a critical decision regarding intermediate term direction, the steady attrition in Treasury bond prices,leading to higher yields, has continued. Last week a move up to the 4% level was firmly rejected but another attempt seems imminent and, in so doing, the pronounced downward trendline will also be challenged.

The remainder of the week will see the release of some key readings on the state of the economy which could produce some fireworks in the Treasury complex. Today sees the release of the Producer Price Index (PPI), core PPI, and consumer confidence data and tomorrow will bring durable goods orders and new home sales data. But perhaps the most market moving potential will come with the semi-annual testimony on monetary policy that Chairman Bernanke delivers to the House Financial Committee on Wednesday and Thursday.

The upward wedge pattern that is encouraging many technicians to expect further upward progress is most acutely revealed on the chart for the UK’s FTSE index which closed within a whisker of the 6000 level.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY FEBRUARY 26, 2008



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

UTX  United Technologies Corporation  

United Technologies (UTX) moved beyond and closed above all three moving averages on increasing volume.



LAMR  Lamar Advertising Company  

Lamar Advertising (LAMR) has positive MACD divergences and could be headed towards $45 in coming sessions.



DKS  Dick"s Sporting Goods Inc.  

Dick’s Sporting Goods (DKS) dropped below all three moving averages on increased volume and looks vulnerable to further selling.

Daily Form February 25, 2008

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MONDAY FEBRUARY 25, 2008       06:10 ET

The big question for the upcoming week is whether we shall see a continuation of the erratic and abrupt intraday reversals that have been so evident during the last few weeks or are we on the verge of a major breakout? During the course of last week the persistent exploration of the boundaries of the narrowing triangular formations evident on most of the index charts, caused the kind of whipsawing that is hazardous to position traders. As the week wore on the thrashing around within the apex of the triangles began to appear unsustainable and we appear to be on the verge of a resolution with a directional breakout becoming more and more likely.

Friday’s late afternoon surge which saw the DJIA reverse from a loss of about 130 to close with an almost 100 point gain was attributed to rumors that positive news was imminent on Ambac (ABK) one of the troubled monoline insurers. Could this be the trigger that will propel the indices up and out through the tapering confines of the triangular patterns?


Overnight trading in Asia produced some interestingly divergent behavior. The Nikkei 225 (^N225) rallied strongly, perhaps inspired by the late rally on Wall Street and optimism that there could be a turn in sentiment on the question of bond and CDO guarantees.

The Hang Seng index (^HSI) barely moved and finished the day with a tiny loss.

European markets are also in an ebullient mood on Monday morning with the FTSE challenging 6000 and a strong prospect that the DAX is on its way to 7000. As I suggested when I was interviewed on CNBC last week I do believe that the DAX is headed for a test of 7200 and if that can be penetrated the dynamics could be surprisingly positive for the German index in the intermediate term.

The chart for the Shanghai exchange (^SSEC) is moving out of sync with other global indices. Weighing on this index is undoubtedly the increasing concerns being expressed by Chinese authorities about rapidly inflating food prices and currency appreciation issues are likely also to produced a shifting in the tectonic plates of the Sino/US trade relationship.

TRADE OPPORTUNITIES/SETUPS FOR MONDAY FEBRUARY 25, 2008



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

MS  Morgan Stanley  

A couple of investment banks showed up in one of my more reliable screens for long trades today. One was for Morgan Stanley (MS) and a similar configuration is seen on the chart for Merrill Lynch (MER).



NUAN  Nuance Communications Inc.  

Nuance Communications (NUAN) has a bullish pullback pattern where price has returned to the conjunction of all three moving averages.



WMT  Wal-Mart Stores Inc.  

WalMart (WMT) looks to be somewhat vulnerable as it is struggling to stay above the $50 level which it rallied to following its most recent sales reports, and there is fading momentum and distributive money flow



SNDK  SanDisk Corporation  

On Friday SanDisk (SNDK) formed a striking hammer candlestick with some positive divergences. The stock appears to have been sold down to a level where a bounce seems likely.

Daily Form February 21, 2008

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Trade successfully without having to be right about the underlying market direction
THURSDAY FEBRUARY 21, 2008       06:51 ET

The pattern of intraday reversals have now become commonplace as all of the major indices continue to grind their way further into the apex of very striking triangular formations. Against this backdrop, and with the trend showing a succession of higher lows still intact, it is also notable that the VIX is declining steadily. For those convinced that a directional breakout is imminent, option volatility strategies would be worth consideration, but for pure directional players the real enigma is which way we will break.

Perhaps more important is how sustainable the breakout will be - in other words which is more likely of the following scenarios. Do we go up sharply and thereby provide an opportunity for anxious longs to liquidate and shorts to get the benefit of higher prices to load up for another assault on the January lows, or do we break down quickly and bait all of the financial Armageddon players into becoming overly zealous which will inevitably be followed by a major short squeeze?

What is becoming increasingly apparent is that the Fed is trying its utmost to sound convincing about being vigilant about inflation, whereas its actions suggest that it will do whatever it can to ward off the doomsday scenarios that are trotted out daily in the financial media.

There are two powerful themes that have been well articulated about the financial economy - one is the notion that the major banks are too big to fail and the second, attributable to Martin Zweig, is the notion that traders should never fight the Fed. Although bankers and their financial engineers have been leaping from trapezes without a safety net the central bankers and the taxpayers (especially illustrated by the Northern Rock rescue in the UK) really have no choice but to prop up a creaking financial system.


While most western European, Asian and North American indices appear to be dithering some emerging market indices are pushing towards all time highs. The Bovespa index in Brazil (^BVSP) looks poised to challenge the mid December historic high.

The chart for the Russell 2000 (^RUT) is also running out of room for further avoidance of the big decision about intermediate term direction.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY FEBRUARY 21, 2008



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

AMAT  Applied Materials Inc.  

The daily chart for Applied Materials (AMAT) highlights the whipsaw/reversal behavior well. The slight uptick in volume on yesterday’s reversal which also brought a close back above all three moving averages looks like a setup for higher prices.



BW  Brush Engineered Materials Inc.  

Brush Engineered Materials (BW) has pulled back to a level where sellers may strike again.



GRMN  Garmin Ltd.  

Recently I noted that the chart pattern for Garmin (GRMN) is unusually bearish with a staircase pattern of bear flags. The one that began in early February had a sting in the tail as the action yesterday included an upward opening gap but as the session wore on the bearish dynamics came back into play.



AMGN  Amgen Inc.  

Price action in Amgen (AMGN) is becoming compressed as the volatility range is constricting. Along with the rest of the market a breakout is imminent and a long straddle options strategy looks appealing.

Daily Form February 20, 2008

CLIVE CORCORAN WILL BE A GUEST ANALYST ON CNBC"s EUROPEAN CLOSING BELL TODAY

TRADE WITH FORM
Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
WEDNESDAY FEBRUARY 20, 2008       05:20 ET

It was another frustrating day for the bulls as an early strong rally faded steadily as the day wore on. Credit Suisse’s confession to the fact that some of its London based traders had made "pricing errors" with synthetic CDO’s which necessitated a $3bn write-off (oops!) added a new dimension of hilarity to the ongoing troubles with structured credit products. Bill Clinton often used to say "we have to get this problem behind us" in regard to the numerous hiccoughs that arose during his presidency and there are doubtless many bankers that feel exactly the same way about the CDO mess.

The Nasdaq 100 (^NDX) notably failed to put in any kind of meaningful assault on the 1850 level that needs to be mounted if the bulls are going to take this market higher and the odds are now increasing that we may be headed towards a re-test of the January lows. The triangular pattern could endure further but we are now entering a more critical time frame for this index when the congestion pattern will need to be resolved. Until this resolution is manifested in a directional breakout we may well see more frustrating reversal sessions like the one seen yesterday.

I shall be a guest analyst this afternoon on CNBC’s European Closing Bell (around 16:30 London time)


The yield on the ten year note has re-entered the trading channel above 3.8% that was discussed last week. Amongst the many factors at play here is a growing anxiety about commodity based inflation which posed a shock for the Chinese economy yesterday when food prices surged and an annualized rate of inflation close to 8% was recorded.

Further evidence that global markets are pre-occupied with the steady increase in food prices and the reality of $100 plus oil again is driving the precious metals again. The price of gold is now approaching all time highs again and if the gold index (^GOX) can push convincingly above the 190 chart level, the $1000 target for the precious metal looks to be achievable, and perhaps in the not too distant future.

The Nikkei 225 (^N225) fell back by more than three percent in trading overnight in Tokyo. The pattern on the index chart is another good example of the evening star candlestick which is cropping up many charts at present.

TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY FEBRUARY 20, 2008



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

NUAN  Nuance Communications Inc.  

Nuance Communications (NUAN) has a bullish pullback pattern where price has returned to the conjunction of all three moving averages.



WYE  Wyeth  

Wyeth (WYE) could be headed towards a test of chart resistance at $44.



LEH  Lehman Brothers Holdings Inc.  

Lehman Brothers (LEH) has moved within a clearly defined range since last August and we now seem headed back down towards a testing of the August low near to $50.



BVN  Compania de Minas Buenaventura SA  

BVN has some typical topping characteristics.



ELNK  EarthLink Inc.  

Earthlink (ELNK) reveals the converse of the evening star pattern and the often bullish morning star formation is given further credence by the reversal off the 200 day EMA.

Daily Form February 19, 2008

TRADE WITH FORM
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TUESDAY FEBRUARY 19, 2008       02:57 ET

Traders in the US returning from a long weekend may well be motivated on the long side in today’s trading, following upbeat action across Europe on Monday, as well as a recovery in Hong Kong Tuesday morning which reversed Monday’s weakness.

The S&P 500 (^SPC) could well see a rally up to the 50 day EMA in today’s session although the more upbeat sentiment that began to appear towards the end of last week remains fragile. Several key releases of data during the course of the week will keep traders on their toes, but the background technical conditions are turning more favorable for an intermediate term rally.


The Nasdaq 100 (^NDX) appears to be bracing for a test of the 1850 level again during this week. If, as is probable, this level is successfully pierced the next layer of resistance will be at the 1900 level.

The FTSE in London had a strong showing in Monday’s trading with a 2.7% rise that was partly fuelled by takeover activity and speculation in the mining sector; the UK’s premier index is notably over-weighted in mining stocks. Also there was a healthy appetite for banking stocks which over-shadowed the development over last weekend in which the UK Government announced the nationalization of the troubled Northern Rock bank.

Despite months of trying, the government failed to find a private sector solution as not a single feasible bid emerged from all of the potential acquirers of the bank’s assets - primarily a mortgage book worth more than $200 billion. UK taxpayers are now owners of the business and, in addition to underwriting the entire balance sheet of the bank, they now face the difficult task of foreclosing on mortgage defaulters and downsizing the banks retail branch operations.

The UK index will need to sustain yesterday’s momentum in order to overcome strong resistance at the 6000 level which also coincides with the 50 day EMA.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY FEBRUARY 19, 2008



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

ROH  Rohm and Haas Company  

The chart for Rohm and Maas (ROH) reveals a long lower tail just above all three converging moving averages. The anemic volume during the last few days of price attrition suggest that the dynamics underlying the preceding pattern, which looks bullish, may be ready to re-assert themselves.



ZMH  Zimmer Holdings Inc.  

Zimmer Holdings (ZMH) also reveals a hammer with a long lower shadow at an area of potential chart support.



FUL  HB Fuller Co.  

Fuller (FUL) has an ascending channel that appears to have reached overhead resistance and the recent declining volume suggests that a orice relapse is probable.



LLY  Eli Lilly and Co.  

Eli Lilly (LLY) has a double bottom pattern with a slightly lower high. I would be targeting a move up towards $55 in the intermediate term.