The week began with a low volume session that failed to clarify the true significance of Friday's reaction to the employment data. The SPY chart below shows a Spinning Top candle just below the 20 day EMA and the volume traded yesterday was only fifty percent of the previous session.

The momentum and money flow charts indicate that the underlying dynamics are fading somewhat and we may find that, without some new impetus to energize the bulls, there is a tendency to drift back toward the 50 day EMA over the remainder of the holiday shortened week.

The Russell 2000 (^RUT) continued its slide from Friday with a further loss of 0.4% to close at 753. As the chart reveals the index finished exactly at its 20 day EMA and we have indicated a chart level that traders may be looking to test in coming sessions.

The Nasdaq 100 (^NDX) slipped back 0.2% yesterday and as with the S&P 500 proxy, the QQQQ instrument also recorded volume that was only 50% of that seen in Fridayââ,¬â"¢s session.

The exchange traded sector fund, XLB, which represents the materials sector is showing signs of negative divergences in what might portend a temporary topping pattern. The holdings in the fund cover a variety of industry sectors including paper and chemicals but also includes the metals and mining sector, including Newmont Mining and Phelps Dodge as core holdings . There may be weak correlation between the sector holdings and traders are taking on an unusually imprecise risk when they take positions in this ETF.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY APRIL 11, 2006

The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions. None of these setups should be seen as specifically opportune for the current trading session.

Affymetrix (AFFX) rose 1.8% yesterday on above average volume and with the positive money flow characteristics in the context of a very narrow volatility range we sense that a breakout is imminent.

Foundry Networks (FDRY) has an interesting chart pattern that technically meets the Hikkake pattern requirements that Dan Chesler has identified. The pattern consists of an inside day followed by a further bar which has a higher low and higher high than the inside day and then the formation reverses for a bearish signal which is triggered when the stock falls below the low on the inside day [converse rules apply for a bullish signal].

The low on the inside day was $17.22 and yesterday's low was $17.20 so the conditions were just met for the pattern. We like the Hikkake template and find it especially useful if it coincides with other characteristics that fit the pattern templates that we have been using in our own methodology. We are already short the stock based on our interpretation of the ascending channel following the gap down from April 4th.

Checkfree (CKFR) has a bullish flag formation but we would place our entry level a little further down the channel.

CenterPoint Energy (CNP) has an intriguing inverted hammer candlestick in what appears to be a basing formation with positive MFI.

Another example of the Hikkake pattern can be seen in the chart for Q Logic (QLGC) and once again the conditions for a bearish entry were met in yesterday's trading.

Hansen Natural (HANS) is revealing some signs of a temporary topping pattern.

Segate Technology (STX) also satisfied the bearish Hikkake signal yesterday but in this case we would suggest that a bullish flag interpretation of the last five sessions would keep us on the sidelines.

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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