The S&P 500 index pushed above the 1280 level intraday in yesterday's quiet session but closed just below it at 1277. Volume for SPY was subdued at about 2/3rd the fifteen day moving average. Despite the rather featureless trading yesterday many stocks recorded gains of more than 5%.

Amongst the stocks that we track the following posted significant gains - ADBE (14%), DVA (11%), CI (10%), WYNN (8%), AL (8%), ERTS (8%), NVDA (7%), F(6%), MSTR(5%) and PAAS (mentioned here yesterday - gained almost 6%).

The daily commentary will be taking a long weekend and will reappear next Tuesday morning.

The action in the Treasury market was unusual yesterday as the chart for the yield on the ten year note reveals. The yield gapped down from the previous close to open at 4.96% and intraday the yield move back up to the 5% level and abruptly turned around to close exactly where it opened leaving an inverted hammer formation.

Yields have now retreated to the levels of early June and twenty five basis points have been shaved from the ten year note since the last bout of anxiety about inflation. It is unlikely that there is too much further down to go until the markets get the next pronouncements from the FOMC.

The ETF for the consumer staples sector, XLP, may be ready for a corrective phase as price is showing some topping characteristics and the momentum and MFI are indicating some divergences.

The chart for the broker/dealer sector (^XBD) is pointing to an imminent breakout as the range contracts. Yesterday's session was an inside day and all of the trading for the last three sessions is confined by the long green candlestick registered last Friday. A move up towards 220 on this index would violate the trendline through the highs since late April and would be a positive development for the overall market.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY AUGUST 3, 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.

RF Micro Devices (RFMD) is in a pullback channel/bull flag formation and the volume has been below average since the large move up last week. A target close to $7 seems feasible.

Schlumberger (SLB) has attributes of an ascending pullback/bear flag formation and recent price behavior, including back to back Spinning Top candlestick formations, is pointing to a lot of overhead resistance at $68.

CenterPoint Energy (CNP) recorded an enigmatic Doji formation with long tails as it fell back yesterday following its recent steep ascent on almost three times the average daily volume.

We mentioned Xilinx (XLNX) yesterday and pointed to the bull flag formation in conjunction with a turn in the momentum and money flow. Yesterday's volume was the lowest for several sessions and the tiny Doji formation suggest that it is close to make or break time for the pattern.

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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