It may be that the FOMC under its new chairman has managed to produce an even more opaque statement than the ones that Alan Greeenspan was renowned for. Reviewing the charts and the commentary following on from the FOMC announcement there seems little consensus on what the future path for rate increases might be. The cynic could argue that this is exactly the intended affect, as it encourages the kind of two sided fractious market activity which is preferable to the risk of everyone interpreting these announcements in the same way which could arise from the Fed adopting a more transparent approach.

Meanwhile the Nasdaq 100 continues to languish in a wedge formation with a descending trend line through the highs and clear support at 1680. The question remains can the DJIA mount a sustainable rally beyond the old 2000 highs without participation from the Nasdaq stocks?

The Russell 2000 (^RUT) also declined by 0.6% yesterday and as we have commented recently, if the underlying bullish tone for this index is still intact we will need to see this index playing its part in helping to support the effort by the DJIA to move into uncharted territory. In terms of assessing the market's considered reaction to yesterday's FOMC statement it will be useful to monitor how this index performs in the coming sessions.

To underline the point we made already the Treasury markets failed to reach any conclusions about the FOMC statement. The Doji candle on the yield for the ten year note reflects the inscrutability of the statement.

The housing index (^HGX) has retreated to the previous lows from early March and we may see an attempt to rally from here that could take us back to the chart support level around 258 which also coincides with the current level of the 200 day EMA. If the rally fails to appear, of if it succumbs quickly to further weakness, this could put the 230 level in play.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY MAY 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.

Allied Waste (AW) is developing a potentially bearish formation.

In line with our discussion of the housing index, KBH could be ready to rally but we would only be targetting the 50 day EMA less than four dollars above yesterday's close

Syntroleum (SYNM) registered a long lower tail yesterday that stopped just short of the low recorded on the other highlighted candlestick which appears to have been an attempt to move the stock higher from its basing pattern.

We mentioned Digital River in our commentary yesterday and there is more evidence that a lower high may be in place.

Microstrategy (MSTR) has been very volatile recently and is not for the faint hearted. The stock has recovered very swiftly from the heavy volume gap down move on April 28th and is now back to the previous resistance level at $108. After this heroic recovery effort on modest volume we need to see whether there is enough further impetus to take us above the 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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