Daily Form August 11, 2009

Detecting Profitable Patterns For Active Traders

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

TUESDAY AUGUST 11, 2009       06:25 ET

Several weeks ago I suggested that 21300 was the next viable target for the Hang Seng Index in Hong Kong based on the 50% fibonacci retracement.
The index is now in this immediate vicinity and the fact that many other indices around the globe are at key fib levels seems to me to be rather noteworthy. What it means may become clearer as the month progresses.
I am reminded of a comment that I came across in a commentary I read yesterday which suggested that many fund managers are expecting a large correction in September. If so many are expecting it in September, it’ll probably come during August which is the month which some in the popular press like to call the "silly season."

The Nasdaq 100 (NDX) continues to show some rather intriguing candlestick patterns directly below its 50% retracement level.

The UK’s FTSE has, in similar manner to the S&P 500, retraced 38% of its historic high and more recent low.

The Bovespa Index in Brazil, interestingly is now confronting the 62% threshold in terms of the major swing levels.


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

BC  Brunswick Corporation  

The longer term view of Brunswick (BC) is one of the more extraordinary with a vertical ascent pattern developing over the last ten days. The stock has the highest RSI reading of the 750 equities which are tracked daily by scanning algorithms and is thus chronically overbought at current levels.
But given the dynamic trajectory there has to be a case that this stock could carry on eventually towards $14.

TEVA  Teva Pharmaceutical Industries Ltd (ADR)  

Teva Pharmaceuticals (TEVA) has a pullback pattern on declining volume and would be a relatively attractive reward/risk proposition on the long side with a buy limit around $51.

ERTS  Electronic Arts Inc.  

Electronic Arts (ERTS) sold off on substantial volume last week and could hit resistance at the $21 price where two moving averages have converged.

TSM  Taiwan Semiconductor Mfg. Co. Ltd. (ADR)  

I shall repeat my comment from yesterday on Taiwan Semi (TSM) which has a well defined bullish flag pattern and could be headed for a re-test of the early May level near $11.40.

ENER  Energy Conversion Devices Inc  

Also from yesterday I mentioned the bullish pullback pattern on the chart Energy Conversion Devices (ENER).
Yesterday the stock moved up by more than five percent but, despite the uptick in volume, may encounter resistance not far from yesterday's closing price.