Daily Form September 29, 2008

Detecting Profitable Patterns For Active Traders
Trade successfully without having to be right about the underlying market direction
MONDAY SEPTEMBER 29, 2008       07:07 ET

Another day, another bailout.

Signs are growing that the European Central Bank and the Bank of England and their respective Treasuries are crafting their own toxic waste management programs.

It would appear that many bankers and politicians, on both side of the Atlantic, will be able to spend more time with their families.

The S&P 500 (^SPC) is poised for a break away from the triangular formation. In such extraordinary times all suggestions are that this could be the capitulation event that many technicians have been expecting. There are others, with more of a focus on Armageddon than I, who are supplying some eye popping downside targets from here.

Meanwhile I would not be surprised by a major move in either direction in such a febrile environment and intend to sit this session out and watch from the sidelines.


Traders in Hong Kong seemed unimpressed with the progress towards a finalization of the US Treasury rescue plan.

The Mumbai Exchange (^BSESN) has closed at a new 52 week low. The weekly chart shows how the index has fallen sharply to the pivotal 200 week EMA level and also to the point at which bubble-mania took hold two years ago.

A few weeks ago I commented in a television interview that the 5300 level seemed to be a possible target for the German market if the markets did not like the measures being taken to rescue the banking sector. As this is being written the Xetra DAX is down by more than 3% and looking precarious. Mood is not being helped by a more than sixty percent decline in Hypo Real Estate one of Germany’ largest holders of commercial real estate.

TRADE OPPORTUNITIES/SETUPS FOR MONDAY SEPTEMBER 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.
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IYE  iShares Dow Jones US Energy  

The IYE sector fund has a combination of a bullish pullback pattern and a basing pattern.



LQD  iShares iBoxx Invest Grade Corp Bond  

Threats of financial contagion are crippling the investment grade corporate bond sector. LQD would be worth monitoring today.



RTH  Retail HOLDRS  

Last week I touched on the pending weakness in the retail sector and will be watching the sector fund RTH for signs that the pullback should fail at overhead resistance.