The S&P 500 (^SPC) extended its more introspective posture following last Tuesday's surge as it registered its fourth consecutive spinning top/doji star formation. Short sellers seem to be sitting on the sidelines and in the meantime the aggressively bullish traders that instigated last week's breakout are awaiting a new impetus to provide further inspiration for a continuation of the rally.



The CBOE Volatility Index (^VIX) has declined steadily since the cathartic session on March 17. The drop below the trendline indicated, and peek below the 200-day EMA in yesterday's session, sets off some contrarian concerns that I have that traders are becoming increasingly comfortable that the big shocks are behind us.



The evolving pattern on the chart for the broker/dealer sector (^XBD) reveals an ascending wedge and a plateau where support is building just below a potential breakout level. The 50-day EMA is shaping up as the first target but beyond that a lot of work will have to be done to take on the next obvious target at 260.



The chart for Goldman Sachs (GS) echoes the pattern seen on the broker/dealer index and I would be looking for leadership from this investment bank to show the way beyond the wedge formation and upwards towards the 200-day EMA in the region of $195.



Kinross Gold Corporation (KGC) has struggled at the $24 level and a nested bear flag pattern is evident.



The Children's Place (PLCE) dropped by seven percent yesterday but volume was much reduced from that seen on the price surge in mid March. Further attrition could see a return to the 50-day EMA but at this level I would be looking for an entry on the long side.



As anticipated in yesterday's column, International Game Technology (IGT) did encounter price rejection within a bear flag as it approached key moving average resistance.



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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