The chart patterns that we discussed in yesterday's column seemed to be pointing toward the long expected bounce and in Thursday's trading the markets obliged with their first significant upward moves for several days. The pattern on the S&P 500 chart prior to yesterday's session met a lot of the requirements following Wednesday's long lower tail and test of the 200 day EMA, and this signal acted as a trigger for many funds to close out profitable short positions and to play the bounce.

The 1280 level now presents itself as a target and as we approach it from below it may pose diificult resistance whereas previously it has been a key support level. Amongst the most liquid stocks that we scan each day more than 30 posted gains of more than five percent yesterday and included some institutional favorites.

The Nasdaq 100 (^NDX) recorded a 1.2% gain yesterday and closed marginally below the 1600 level. The 50 day EMA sits at 1680 level but that may present too much of a hurdle in the current market environment, and we would suggest that the area around 1640 may prove to be a more realistic target in the near term.

The chart for the Russell 2000 (^RUT) shows how the pattern we commented on yesterday - the long legged Doji candlestick which spiked down to the 200 day EMA on Wednesday delivered a significant short term profit opportunity on the long side as the index rallied by 2% in yesterdayââ,¬â"¢s action. We would expect the 740 level to be targeted but if this level is attained in the near term we would then be looking to retreat to the sidelines again.

The chart for the banking sector (^BKX) may be in the process of creating a bearish flag formation as price is consolidating at the levels that precededed the late April breakout. We will be watching this index closely in coming sessions to try to gauge how much conviction there is behind the relief rally.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY MAY 26, 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.

Corning (GLW) was one of the beneficiaries from yesterday's rally and may have further to go before the rally runs out of steam.

Another institutional favorite that rallied yesterday and may continue somewhat further in coming sessions is Haliburton (HAL).

Traders of copper futures need to have strong stomachs as this commodity has been extraordinarily volatile recently. One less dramatic way of participating in what still seems to be a bull market, that has gone through an abrupt correction, is through stocks such as Freeport McMoran (FCX) which also has exposure to the gold and silver markets as well.