After coming within a point of its 2006 low the Russell 2000 along with all of the indices mounted a very strong rally yesterday that left the index 2.8% higher on the day. Yesterday was yet another example of a strong trend day in which there was no other viable intraday positioning than being long all day. The 705-710 looks set to be tested in coming sessions (perhaps today).

The S&P 500 powered ahead by 1.7% and closed at the 1260 level which coincides with the 50 and 200 day EMA's. 1280 is now the next target for the bulls.

The Nasdaq managed a 2.2% gain yesterday but has a lot more work to do to catch up with the more postive chart formations of the DJIA and the S&P 500. 2160 would be a first stop in this process and that lies 100 points above yesterdayââ,¬â"¢s close.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY JULY 25, 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.

Digital River which we recommended a week ago on the long side has shown the typical reversal patterns of many stocks in the last week. Yesterday saw a Morning Star candlestick formation and we would be targeting $42 in coming sessions.

We would expect 51job (JOBS) to continue upwards to $24. The chart formation is a good example of the Morning Star candlestick pattern.

Heinz (HNZ) may suffer as asset managers switch away from defensive issues. There is evidence of a lower high and volume is picking up on the downward moves.

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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