Daily Form February 12, 2009

Detecting Profitable Patterns For Active Traders
Trade successfully without having to be right about the underlying market direction
THURSDAY FEBRUARY 12, 2009       07:01 ET

The doji star on the Nasdaq 100 chart (^NDX) reveals that the intraday low touched an intersection at two key moving averages in the vicinity of 1205.

Overseas markets are running into strong headwinds in Thursday morning’s trading with Germany’s DAX index off by more than two percent.

Also coming under renewed pressure is the British pound which has given back about a large part of its recent move upwards against the dollar. The political backdrop in the UK continues to deteriorate with the most recent shoe to drop for UK prime minister Brown being the fact that the man he appointed as deputy chairman of the UK’s Financial Services Authority - the FSA - was himself the subject of a criticism by the regulator that he was taking too much risk when he was running the Halifax bank.

It is rather refreshing to witness the manner in which all of the webs between bankers, regulators and politicians are unraveling and the individuals involved are reduced from hero to zero in the full gaze of the public.

This is real transparency at work.

The most striking thing about the chart below for the exchange traded fund which provides traders a convenient way to take a position on the spot price of gold, GLD, is the very substantial volume yesterday.

The Nikkei 225 (^N225) dropped more than 3% in trading Thursday following a national holiday in Japan on Wednesday.

The index is inching its way towards important support levels in the vicinity of 7500 which have been touched during the last several weeks but from which rebounds appeared quickly.

On October 28th there was a severe one day drop to just below 7000, a level not seen for more than 25 years, and the risk to the index is that traders may wish to see if this was merely an aberration or whether the level needs to be re-visited.

Each day seems to bring news of major Japanese manufacturers making announcements of major layoffs and the economy further has to contend with a currency which Japanese policy makers might prefer was not perceived as a safe haven for risk averse investors.


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

TJX  The TJX Companies Inc.  

TJX has a mini bull flag formation.

XLU  Utilities Select Sector SPDR  

The utilities sector fund XLU, has broken below a key moving average level on a pick up in volume over the last two sessions.

TZOO  Travelzoo Inc.  

Travelzoo (TZOO) has pullback pattern which resembles a bull flag and there is a likelihood of support at the 20 day EMA around $4.85

ADI  Analog Devices Inc.  

Analog Devices (ADI) could find support closer to the $20 level.