The nagging doubt that I have from yesterday's reversal session is whether traders will be convinced that the January lows have yet been satisfactorily tested and that the way is clear for another attempt to try to rebuild an assault on the upper limits of the triangular range patterns. The index chart which could most plausibly be adduced in favor of a determined effort to test key support is for the Nasdaq Composite (^IXIC).

I remain sceptical that we are done on the downside and as with my comment yesterday I am concerned about the descending wedge pattern that is still in development and could continue for several more sessions before a resolution of that pattern becomes critical.



The late reversal on the S&P 500 (^SPC) still leaves me wondering about what would happen if the market looked over the abyss in the vicinity of the 1270 level.



Nuance Communications (NUAN), mentioned recently on the long side, finally produced the expected surge with an almost ten percent gain during yesterday's session.



Yesterday I drew attention to Avid Technology (AVID) and suggested that the valiant pullback effort seemed to have reached an area where sellers could be re-energized. The drop yesterday could see further follow through in the sessions ahead.



Further follow-up on a discussion from yesterday, the Biotech Holders Trust (BBH) continued to move higher after the break above all three moving averages in Friday's session.



Cognizant Tech (CTSH) has a flag-like pattern that resembles the pattern for Nuance and I would not be surprised to see a similar price surge in coming sessions.



BJ Services (BJS) dropped below the 200-day EMA and the momentum and money flow suggest that the recent break above this key moving average and subsequent fall below may have expended all of the constructive price behavior in the near term.



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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