The indices continued their upward progress yesterday but the gains were modest. The S&P 500 cash index (^SPC) closed just below 1400 for a 0.2% gain and the Nasdaq Composite (^IXIC) recorded a narrow range Doji-like candlestick. The Dow Jones continues to register new all time highs but the Russell 2000 posted a minor retreat following Wednesday's all time high of 792.

Having spent several session above the 1160 level the oil index (^XOI) abruptly reversed yesterday in a whipsaw move that may have been designed to shake out the faint hearted traders that speculate in the sector. The reverse brought the index back to the 20-day EMA in a hurry and we are curious to see whether the whipsaw patterns persist or whether a new leg down is emerging.

The gold index (^GOX) produced a similar whipsaw pattern to the oil index yesterday and yesterdayââ,¬â"¢s return to the 50-day EMA has erased all of the gains made in November.

TRADE OPPORTUNITIES/SETUPS FOR FRIDAY NOVEMBER 17, 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.

BEA Systems (BEAS) produced a disappointing earnings report yesterday and the stock plunged by more than 16% on very heavy volume. The chart patterns since October provide a good example of the negative divergences and pullback channel analysis that we often cite in this column.

Capital One Financial (COF) appears to have broken down from a descending wedge formation.

DaVita (DVA) shows a rather dramatic reversal formation and the stock moved decisively below the 200-day EMA on twice the average daily volume.

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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