Despite a temporary bout of selling that followed news that median price for sales of existing homes suffered its steepest year on year decline since 1970 the indices quickly regained their composure and ended the session with a further bullish continuation pattern. The S&P 500 moved ahead another 0.5% to close at 1389.

Treasury yields have staged a substantial retreat over the last two sessions. The yield on the ten year note finished yesterday's session at 4.72% which is ten basis points below where it started the week.

The Russell 2000 (^RUT) was the standout performer amongst the indices with a 1.2% advance and closed less than six points from its all time closing high.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY OCTOBER 27, 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.

Integrated Device Technology (IDT) has a well defined bear flag formation that has developed since the big sell off that took place on October 11.

We will be monitoring Novellus (NVLS) for signs that its sharp recovery from the recent gap down move on heavy volume may run into resistance.

Red Hat (RHAT) was decimated by the announcement that Oracle is moving into providing support and services to Linux users. There may be some effort to mount a relief rally but the stock seems destined to move even lower.

Archer Daniels Midland (ADM) which was discussed yesterday is extending its gains with a further 2.8% gain.

Washington Mutual (WM) recorded a tiny body candlestick close to all three moving averages following last week's gap down.

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
The purpose of this article is to offer you the chance to review the trading methodology, risk reduction strategies and portfolio construction techniques described at tradewithform.com.  There is no guarantee that the trading strategies advocated will be profitable. Moreover, there is a risk that following these strategies will lead to loss of capital. Past results are no guarante of future results.  Trading stocks and CFD's can yield large rewards, but also has large potential risks. Trading with leverage can be especially risky. You should be fully aware of the risks of trading in the capital markets. You are strongly advised not to trade with capital.