The indices traded within narrow ranges yesterday and several chart formations reveal inside day patterns including that for the S&P 500. Less than nine points separated the high and low for the day on the index and the pattern could be pointing towards an attempt to mount a period of recovery following last week's severe bout of selling

The Russell 2000 produced a very similar pattern to the one we have just reviewed and we may be about to witness a stablization effort in the vicinity of 680. The June 14 intraday low sits only 7 points below yesterday's close and, given the newsflow we cannot rule out the alternative scenario that we could see a violation of this level in that would trigger further selling back towards 620.

Treasury yields have eased by about fifteen basis points over the last several sessions. Yesterdayââ,¬â"¢s tiny Doji on the ten year yield chart (^TNX) indicates that the Treasury market is at a turning point

The ETF for the consumer disctretionary, XLY, suffered an acute case of vertigo in the second half of last week, in line with the performance of the housing and retail sector indices that we discussed yesterday. In yesterday's trading there may have been the first suggestion that some kind of recovery effort is to be expected soon.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY JULY 18, 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.

First Marblehead (FMD) suffered a dramatic drop at the beginning of the month and the recent action is suggesting that another downdraft may not be too far off.

Hilton Hotels (HLT) may find support at the 200 day EMA as suggested by yesterday's long lower shadow on the Hammer candlestick.

Lam Research (LRCX) may also find support at its 200 day EMA.

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.

Disclaimer
The purpose of this article is to offer you the chance to review the trading methodology, risk reduction strategies and portfolio construction techniques described at tradewithform.com.  There is no guarantee that the trading strategies advocated will be profitable. Moreover, there is a risk that following these strategies will lead to loss of capital. Past results are no guarante of future results.  Trading stocks and CFD's can yield large rewards, but also has large potential risks. Trading with leverage can be especially risky. You should be fully aware of the risks of trading in the capital markets. You are strongly advised not to trade with capital.