Tuesday's strong reversal patterns segued into a powerful trend day for most of the broad market indices yesterday. When markets are as unidirectional as they were yesterday the usual trading rules do not apply and there was no money to be made from any intraday shorting activity. The S&P 500 rallied right up to a potential resistance level at 1260 which also coincides with the 200-day EMA. The zone between 1260 and 1280 will act as a restraint on yesterday's enthusiasm but 1280 must be a legitmate target in coming sessions.

The Russell 2000 (^RUT) produced one of the best performances of the day as it rallied by 3% and as with the S&P 500 there is potential resistance to overcome at the 200-day EMA and the descending trendline through recent highs.

The Nasdaq 100 was a relative under-performer in yesterdayââ,¬â"¢s rally moving up only 1.2% compared to considerably stronger moves from most of the other indices. 1560 on the cash index equates approximately to the 38 level on the QQQQ proxy and if this rally has legs we should be expecting to see this as a target in the coming sessions. Notably volume for the QQQQ was less than for Tuesdayââ,¬â"¢s session while the other main proxy instruments - SPY,DIA and IWM all managed to outdo Tuesdayââ,¬â"¢s volume.

The banking sector (^BKX), aided by a decline in Treasury yields, moved up very decisively yesterday piercing the trendline through the highs and recording a 3% gain for the day.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY JULY 20, 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.

We would reiterate the case we made earlier in the week for a possible short opportunity with First Marblehead. Yesterday's Spinning Top formation coming on a powerful up day for the markets could be a sign to expect further weakness ahead.

Another candidate on the short side is Kraft Foods which, like FMD had a recent sharp drop on heavy volume and seems to be struggling just above the 200-day EMA.

The ETF for the financial sector powered ahead yesterday on untypically heavy volume. There may be a pause for breath but, with such strong momentum in the banking sector, higher prices should be expected.

We would expect 51job (JOBS) to continue upwards to $24 although it may waver in between.

Altera (ALTR) has positive momentum and money flow divergences and may be targeting $18.

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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