Daily Form February 13, 2009

Detecting Profitable Patterns For Active Traders
Trade successfully without having to be right about the underlying market direction
FRIDAY FEBRUARY 13, 2009       06:41 ET

Reviewing the hourly chart for SPY there is a clear suggestion that bulls were waiting to pull the trigger as the index came down towards the January 20th lows. The fact that the volume kicked in before there was a real testing of that low suggests that a trading range mindset is prevailing at present, rather than a concerted effort to properly test the possibilities of a new overall leg down.

Contrary to some people’s intuition I suspect that the reluctance to aggressively probe for evidence of game changing buying support at lower lows at this stage is actually an overall negative in the longer term outlook for US equities.

The hourly chart for the XLF sector fund is revealing even more the fact that there is a reluctance to stridently confront the upper and lower boundaries of the recent range. This is evidenced by the triangular pattern which simply postpones the inevitable resolution that must come.

I have for some time maintained that the financials will have to show some really convincing evidence that the worst is behind the sector before the tone for the general market can show any kind of sustained trending behavior. At present the dithering in the financials suggests that a trading range is the presumed outlook for the broad market in coming sessions.

The sector fund GLD posted a rather tiny range star pattern and there is evidence from the RSI indicator that the momentum, in the short term, may have been spent to gain the ground that has been seen this week.

Longer term the probability of another shot at the $1000 per ounce level has now increased and should we see a high momentum breakthrough on the third attempt, when it comes, this would be very bullish for the precious metal.

The way that the chart pattern is unfolding for the ETF which tracks the Japanese yen, FXY, is still suggesting that further weakness lies ahead.


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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TZOO  Travelzoo Inc.  

Yesterday’s comment regarding Travelzoo (TZOO) was very timely

There is a pullback pattern which resembles a bull flag and there is a likelihood of support at the 20 day EMA around $4.85

Buying at the level stipulated would have returned twelve percent on the session.

FISV  Fiserv Inc.  

Fiserv (FISV) has a bullish flag pattern.

ACH  Aluminum Corp. of China Ltd.  

I would target another attempt to move back towards $16 for Aluminum Corp. of China Ltd (ACH).

LAZ  Lazard Freres  

Lazard Freres (LAZ) also has a constructively bullish tone.

TBT  Ultra Short Lehman 20 Plus ProShares  

TBT, a sector fund entitled the Ultra Short Lehman 20 Plus ProShares, has reached back down to an area of moving average support where playing the long side would benefit from an uptick in the yields on long term US Treasuries.