Daily Form February 26, 2008

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
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.


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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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.