The S&P 500 (^SPC) closed at an all-time high in the aftermath of Friday’s employment report. Traders seem to be favorably disposed to almost all economic news at present and the enthusiasm shown for the small cap stocks, which saw the Russell 2000 (^RUT) make an impressive 1.9% gain on Friday, strengthens the intermediate outlook for equities.



While equity markets found reasons to celebrate the employment data, Treasury traders found a reason to sell US government bonds across the yield spectrum. The yield on the ten-year note moved up by 12 basis points and the 4.75% level now seems to be in play. Reviewing the longer-term charts there is clear resistance to yield attrition at the 4.4% level and the next target may well be a retesting of the psychologically significant parameter of five percent.



Many indices are now in record-high territory again but the Dow Jones Transport index (^DJT) has some catching up to do as it contemplates the record close of 5446 on July 19. Friday’s strong performance with a 3.3% gain enabled the index to break free of all three moving averages and once again underlines the breadth of support for the current bullish bias.



TRADE OPPORTUNITIES/SETUPS FOR MONDAY OCTOBER 8, 2007

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.

Robert Half International (RHI) moved decisively above the 50-day EMA on heavy volume and I would be targeting $35 during the next few sessions.



As discussed in Friday’s commentary, International Paper (IP) was presenting a rising wedge formation, which often precedes an upward price breakout. The stock moved up 2.3% in Friday’s trading on almost twice the average daily volume and I would suspect that there is further upside potential.



EBAY should be monitored for further evidence that a correction might be imminent.



Synaptics (SYNA) is in the process of forming a bearish flag formation and I would be looking for an entry opportunity on the short side in the region of Friday’s high of $47.42.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market. He specializes in market neutral investing and and is currently working on a book about the benefits of trading with long/short strategies, which is scheduled for publication later this year.

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