Whether the lack of follow-through in yesterday's trading reflects the market's anxiety about the lack of progress of the Paulson initiative through Congress or something more deep seated remains to be seen.

Not providing much guidance on near term direction is the inscrutable inside day pattern registered on the KBW Banking Index in Monday's session which brought the sector back below the 200-day EMA towards a retesting of the shorter term moving averages.



The Nasdaq 100 index (^NDX) continues to under-perform and a testing of last week's low could be on the agenda for today.



The 720 level on the Russell 2000 (^RUT) is a powerful attractor and puts the index, from at least a short term point of view, back into the neutral zone.



The dollar was a major casualty in yesterday's session and the ETF for the Australian dollar returned to the 85 cent level as anticipated.



The chart for the exchange traded fund for the regional banks (RKH) has returned quickly to the 200-day EMA but on declining volume.



The retail sector fund RTH broke decisively below moving average support but once again the volume was relatively subdued.



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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