Traders around the globe (even many who would normally be asleep in the Far East) will be transfixed today as they watch the likely gyrations of the US equity indices. Since the U.S. markets closed on Friday, the rest of the world has suffered two of the most traumatic trading days in recent memory. I will focus on the remarkable chart patterns of several of the global indices below but initially let's review the S&P 500 (^SPC) as of Friday's close and where we may be headed during today's trading.

Futures indicate a much lower opening and, from a weekly perspective, the 1240 level which has been marked on the chart could be a target for early testing in today's session. There is a lot of price activity within the 1240-80 region on the daily charts and I would be surprised to see us slice through all of that without some attempts to stabilize for at least a couple of sessions. Chairman Bernanke may ride to the rescue and that prospect will keep the bears on their toes. It has been a great time to be bearish and some hedge funds that are playing the global equity derivatives on the short side are reaping vast rewards. When the short covering begins we could see a mammoth rally. But where it will begin and how enduring it will be is now the new enigma.



When I wrote last week that the Nikkei 225 (^N225) was headed towards the 12000 level I did not expect that we would be getting there so soon.



The Hang Seng (^HSI) has plummeted in the last two sessions and is now almost certain to test the August lows. As discussed many times previously the "de-coupling" thesis turned out to be just as bogus as the alleged benign risk transfer capabilities of CDOs.



Having looked to be the outperformer within the mature European markets, Germany's DAX has played catchup in the last two sessions and as this is being written, despite some bounce behavior by the FTSE in London, the DAX is down by more than 2%. However, as the chart below reveals, the 6500 area, which marked the level at which support emerged following the late February sell-off, may provide a place for the bears to catch their breath for a while.



I will be looking at intraday swing trades in the next few sessions and would treat position trading with the utmost caution. One of the few charts that looks promising on the long side is for Cymer (CYMI) which could make it back to the 50-day EMA in coming sessions.



Synopsys (SNPS) also has some positive divergences in the context of a possible double bottom formation.



YRCW has a distinctive bear flag formation and seems like a good example of how traders will be looking to sell rallies on technically weak stocks.



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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