It was another roller coaster ride for traders in US equities. An early selloff down almost to the March 17 level on the S&P 500 (^SPC) brought in some buyers. Reviewing the chart, the picture is one of a rather perfect double bottom but that makes me somewhat skeptical about how reliable a foundation for a rally this might be. Rather it would seem that we saw a bout of short covering at a fairly predictable technical level, but this market needs some institutional buying on the long side to mount a sustainable rally.



The Russell 2000 (^RUT) bounced neatly off the 680 level discussed here yesterday.



The Brazilian Bovespa index (^BVSP) is approaching a chart zone where some stability might arise and where a tradable bounce could be worth consideration.



Discussed here yesterday, IYM, the sector fund for basic materials continued its precipitous slide. Another fund which provides similar exposure is XLB and this chart reveals the deteriorating technical conditions for the sector.



I would not want to be a buyer of the sector fund for Russian equities (RSX) until it comes down further towards the 200-day EMA.



Xilinx dropped below its 200-day EMA and registered a hammer candlestick under one interpretation or a hanging man pattern on another. There are negative divergences apparent that are shared by many charts at present and I would keep this on a watch list for an entry opportunity on the short side following any bounce effort.



Crown Castle International has almost identical characteristics to XLNX.



I am going to repeat the comment that I made last week regarding Lehman Brothers - Is this bank going out of business - the bears seem to be betting that it is but they really don't know and would be very quick to cover on any snapback rally.



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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