The most recent two day formation on the S&P 500 chart is both unusual and interesting. For both sessions there is a very narrow body to the candlestick (in fact Friday's open and close were virtually the same) and this was accompanied by a long upper and lower tail in each case. Consecutive Doji like formations at the top of the range could be signalling a lack of conviction to take the market higher but, just as likely,it could have had a lot to do with the options expirations activity at the end of last week.

The Nasdaq Composite (^IXIC) retreated more severely than the big cap indices on Friday with a loss of 0.8%. The index opened on its high for the day but never ventured back to test the previous day's high above 2375.

The Russell 2000 had two days of impressive advances last week but on Thursday and Friday we saw some minor consolidation. We have included the chart for the exchange traded proxy IWM to illustrate some possible momentum concerns that could be expressed.

The retail sector fund, RTH, has clearly broken below the uptrend line that we have drawn and this was confirmed by the subsequent failed effort to recover the lost ground in early April. While we would expect to see a further attempt to break above the downward trendline we will be watching the chart to see whether the 200 day EMA is going to hold.

TRADE OPPORTUNITIES/SETUPS FOR MONDAY APRIL 24, 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.

In Friday's commentary we suggested that the very positive MFI on the chart for Capital One Financial (COF) could be a precursor to a breakout. Sadly we were a day late with noticing this positive money flow as the gap upwards exceeded our entry target.

Another of last week's recommendations that did deliver nicely for us last week was FFIV which as the chart shows has many of the characteristics that we like to see in a bearish pattern.

Just to reinforce the point about the kinds of bearish formations that are very reliable we have included the chart for Foundry Networks (FDRY) which we exited from after the first drop from an ascending channel but where the second pattern was even more profitable.

BMC Software has an interesting positive money flow divergence and may be setting up for a breakout.

We think that Fastenal (FAST) looks vulnerable and would be a seller on any intraday strength in Monday's session

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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