Daily Form July 15, 2009

Detecting Profitable Patterns For Active Traders

Successful trading without having to be right about the underlying market direction

WEDNESDAY JULY 15, 2009       02:53 ET

The Russell 2000 (RUT) rallied for a second day but once again on light volume. There is a declining wedge pattern developing as the index attempts to regain the territory above the 200 day EMA.

The VIX has surprised many (myself included) by returning to its multi-month lows at just 25. The Ichimoku chart highlights the fact that this index has been able to avoid any contact with the pink cloud since April.
Once options expiration is behind us it will be worth monitoring whether the index can continue its decline below what might possibly be a double bottom pattern.

More often than not I comment on the short side of the long term Treasury curve which can be traded via the TBT sector fund. The long version for this sector (without leverage) TLT is revealing a mini bull flag formation.


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 a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm

DBB  PowerShares DB Base Metals  

DBB, a sector fund which tracks base metals, looks technically vulnerable.

XLB  SPDR Materials Select Sector  

I shall return to my comment from Monday's commentary

XLB, an exchange traded fund which tracks early cyclicals is evolving a second bearish flag formation and could be in the process of forming a pattern which I called the downward staircase in Long/Short Market Dynamics .