Daily Form May 29, 2008

Profit Patterns and Risk Management For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY MAY 29, 2008       05:37 ET

The yield on the ten year Treasury closed above 4% for the first time this year. I shall not repeat yesterday’s discussion but this now becomes one of the most important charts to monitor for how traders are discounting the economic outlook.

Overseas markets are rallying again. The Brazilian index (^BVSP) moved back up 3% on the session and I shall be watching to see whether the index can sail past its historic high achieved just over a week ago.

In overnight trading the Nikkei 225 (^N225) also regained more than 3% and could be on its way towards a testing of the 200 day EMA which lies about three percent above today’s close.

It was a roller coaster ride for equities yesterday but most of the broad indices ended in positive territory. After out-performance in Tuesday’s session the Nasdaq 100 (^NDX) and Nasdaq Composite (^IXIC) were relative laggards and left rather small range hanging man candlesticks.


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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SGR  The Shaw Group Inc.  

The Shaw Group (SGR) mentioned last Friday on the long side produced a nice gain of almost six percent yesterday and could still have further to go. In such circumstances taking profit on half of the position is often the way to go.

CTSH  Cognizant Technology Solutions  

Cognizant Technology Solutions (CTSH) still looks vulnerable.

DRIV  Digital River Inc  

Digital River (DRIV) gapped up on the open and closed above the 200 day EMA on an uptick in volume but now has a clear line of chart resistance to overcome. I shall be watching today to see whether there is sufficient buying power to propel us above this hurdle.