Concerns about declining productivity and wage growth provided a cue for some rethinking amongst Treasury traders and fund managers regarding future Fed policy. The same concerns also provided a timely opportunity for some short sellers to test the market's resolve as critical chart levels are being approached. The S&P 500 cash index declined by one percent in a session which saw the index close more or less at its low for the day.

The Nasdaq Composite (^IXIC) failed to hold on to its foothold above 2200 as it closed down 1.7% on the session and also below its 200-day EMA. It would be surprising if the index fails to find support in the region just below yesterday's close as both of the short term moving averages lie just below yesterday's close and have recently turned upwards.

The Russell 2000 (^RUT) was the poorest performer amongst the broad indices and lost 2.1% to close at 712 but similar comments apply to the ones that were observed for the Nasdaq Composite. All three moving averages for the Russell 2000 are positioned in the vicinity of 705-10.

Weakness amongst many energy stocks was reflected in the poor performance yesterday of the oil index (^XOI), which dropped more than three percent. As the chart reveals there is further capacity for this index to explore lower prices in coming weeks, perhaps back towards the mid June lows.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY SEPTEMBER 7, 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.

Yahoo (YHOO) encountered resistance at $30 as we anticipated last week. The chart is indicating poor money flow characteristics and the recent recovery rally may have run its course in the near term.

Amazon (AMZN) may also have reached a short term zenith in its recovery channel.

Akamai (AKAM) registered a perfect Evening Star candlestick formation and has two long upper tails showing overhead resistance at $42.

As anticipated, Marathon Oil (MRO) broke below $80 yesterday which was our first target and we would expect further price erosion eventually.

Intel (INTC) encountered resistance at $20 and may have further weakness to contend with.

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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