The S&P 500 encountered resistance at 1300 as expected yesterday. While we would expect another leg up to 1320 it would not be surprising (even constructive) to see a temporary consolidation of the progress made this week.

The chart for the Nasdaq 100 (^NDX) touched 1584 intraday yesterday, which was just below the 200-day EMA and almost 100 points higher than last Friday's closing price. Despite the week's impressive gain the index lies almost 200 points below the multi year highs which were achieved in early January close to 1760.

The broker/dealer sector has moved up steadily this week but is looking like it may face a resistance hurdle close to its closing level yesterday

The oil sector (^XOI) has retreated towards an uptrend line and several of the big oil stocks are showing signs of possible near term topping patterns.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY AUGUST 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.

American Tower (AMT) registered a Shooting Star in the vicinity of the May highs and there are some negative divergences appearing.

Altria (MO) also is showing negative divergences in conjunction with yesterday's long legged Doji formation.

Bank of America (BAC) could be preparing for a corrective pause.

The chart for Dress Barn (DBRN) suggests that the 50-day EMA at $23 is a feasible near term target.

Mylan (MYL) nosedived recently and may have reached the top of a bearish ascending channel/bear flag formation.

Haliburton (HAL) seems to be having some difficulty in moving above the 200-day EMA.

The chart for Merck (MRK) shows how the steep drop yesterday was anticipated by the negative divergences.

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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