Daily Form September 4, 2009

Detecting Profitable Patterns For Active Traders

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

FRIDAY SEPTEMBER 4, 2009       06:40 ET

The area highlighted in yellow on the S&P 500 chart coincides with the failed secondary momentum rally in the latter part of August.
My suspicion is that there are many waiting to sell rallies back into the zone between 1000 and 1020 and the pattern of the last week or so when "good" news with a subsequent spike brings out the sellers will be on the agenda in coming sessions.

The weekly chart of the Gold Index (GOX) shows that the index has surpassed the closing levels seen in May and must now target the area around 220 which was seen in March 2008.
Technically the pattern looks encouraging and I shall leave for another occasion the dissonance that this would creates for the stronger dollar scenario which I also favor.

In Asian trading the Hang Seng (HSI) index managed to put on about 500 points in the last hour of trading which is certainly intriguing given the fact that key data is being released in the US today.
Meanwhile the Nikkei 225 has been sliding for several session but should find some support at the 10,000 level.


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

XHB  Homebuilders Select Sector SPDR  

The homebuilding sector, as available via the XHB fund, illustrates clearly a pattern which is visible on many charts - the clear failure by momentum indicators to confirm the bullish price action in the second half of August.

MER  Merrill Lynch and Co. Inc.  

Merrill Lynch (MER) looks vulnerable on this Ichimoku chart and the bounce off the top of the green cloud as well as regaining its foothold above the 50 day EAM was accompanied by notably light volume.

DBA  PowerShares DB Agriculture  

DBA, the sector fund which tracks agricultural commodities, broke below key technical indicators yesterday.

SONS  Sonus Networks Inc.  

Sonus Networks (SONS) has a bullish flag like pattern.