In yesterday's column, we discussed the very narrow intraday range of 4.5 points for Wednesday's trading of the S&P 500 cash index. The index managed to even outdo that yesterday as it registered an inside day with a range of only 3.7 points.

The cash index for the Russell 2000 (^RUT) also supplied an enigmatic candlestick formation in yesterday's trading - a tiny range inverted hammer/Doji formation. 

 

Treasury market traders have shaved almost fifty basis points from the yield on the ten year note since the release of last monthââ,¬â"¢s employment report.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY SEPTEMBER 1, 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.

Since touching an intraday low of 16.74 on July 21, Intel Corporation (INTC) has recovered by approximately 17%. Twin hurdles now present themselves - the 200 day EMA and some chart resistance in the proximity of $20.

The chart for Marathon Oil (MRO) displays the kind of volatile topping pattern which illustrates the tricky nature of trading on the short side in the oil sector. The whipsaw action over the last six weeks cannot disguise the fact that the primary orientation is a corrective one but without skilful position management trading from the short side could have been less profitable than playing the bounces. In the last couple of sessions the balance of probability has tipped in favor of a retreat toward $80 and an eventual longer term target of $75.

The chart for Williams Companies (WMB) shows a tiny Doji formation following Wednesday's 2.3% drop and there are clear signs of distribution.

Within the context of the whipsaw possibilities that we discussed in connection with Marathon's chart, Exxon (XOM) could be headed towards $64 in coming sessions.

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
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