For the second day in a row the S&P 500 cash index (^SPC) finished the trading session where it began and a second Doji candlestick was registered. With the release of September's employment data later in the week and the mid-term elections on the horizon it appears that asset managers are biding their time in a holding pattern, but range contraction and procrastination can also be precursors to increased volatility and significant directional moves.

The yield on the ten year Treasury note fell back to 4.61% yesterday and has retreated over the last five sessions from the top of the recent range at 4.85% towards the bottom of the range close to 4.55%. If the interpretation of impending economic data leads to a break below the bottom of the range the re-evaluation of current asset allocation models has the capacity to be disruptive to the equity markets.

The oil services index (^OSX) appears to have found support at the intersection of the short term moving averages and the chart action echoes the patterns that are visible in the broader energy complex.

TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY NOVEMBER 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.

Anadarko Petroleum (APC) is one of many of the energy related stocks that would appear to be finding some support at a key juncture.

Crown Holdings (CCK) has developed an ascending channel formation following the gap down on October 17. Especially noticeable is the subdued volume during the pullback following the gap down move in mid-October.

International Paper (IP) closed below the 200 day EMA on above average volume.

Linear Technology (LLTC) may suffer from further weakness as it attempts to climb back above the $32 level.

Northern Trust (NTRS) could be heading towards a failure pattern as it attempts to recover from the mid October slide.

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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