Daily Form January 30, 2008

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
WEDNESDAY JANUARY 30, 2008       07:15 ET

The Nasdaq 100 (^NDX) has failed to make commensurate progress this week and the emerging chart pattern is pointing towards an imminent directional breakout which could arise later today when the FOMC decision is announced. Slightly less obvious on this index, but in evidence on many other index charts, globally as well within the US market, is the proximity of notable chart resistance. The 1900 still looks like a compelling target for the bulls but it is the near term bias which remains quite opaque in the current trading environment.

The S&P 400 Midcap index (^MID) has pulled back from the mid January turmoil and now confronts a clear barrier at the 800 level.

This has been an unusually difficult period for reliable diagnosis of chart patterns and when combined with the sharp intraday whipsaws, to be expected later today as well, it is keeping me on the sidelines more than normal. Indicators for the health of the underlying economy continue to be slightly confusing and yet we should expect another generous move by Fed governor Bernanke today, largely predicated on Wall Street problems rather than Main Street issues.

The Hang Seng index (^HSI) drifted steadily downwards in Wednesday’s trading to close near to the intraday low and with a 2.6% loss. The 25,000 level is proving to be an area where over exposed long funds appear to be liquidating positions and the convergence of the 200 and 20 day EMA’s poses a significant technical hurdle.

Yet another index which has rallied back to a clearly identifiable chart barrier is the Bovespa index in Brazil (^BVSP).


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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VMC  Legacy Vulcan Corp.  

Legacy Vulcan (VMC) has recovered well and there are positive money flow characteristics but there could be an abrupt short term reversal near to chart resistance at the $78 level.

COP  ConocoPhillips  

Conoco Phillips (COP) faces hurdles near to yesterday’s close.

SHW  Sherwin-Williams Company  

Sherwin Williams (SHW) has a pullback channel that could be pointing to higher prices ahead.