The recovery from Monday's broad sell-off continued and accelerated yesterday and the S&P 500 registered a 0.9% gain to close marginally below the 1400 level. We are in the midst of a lot of contrasting data which seems to alternate between either pleasing the soft landing scenario advocates or raising awkward questions for them.

The energy sector has made steady progress since its nadir in early October and with its more than 3% gain yesterday registered an all time high just above $60. The close puts it above the previous high from late April and breakout players may find the temptation to climb aboard too hard to resist. Whether the breakout will be faded remains to be seen.

A rather prominent Doji candlestick was recorded yesterday on the chart for the broker/dealer sector in conjunction with a close at the 20-day EMA.

TRADE OPPORTUNITIES/SETUPS FOR THURSDAY NOVEMBER 30, 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.

BJ Services pushed above the 200-day EMA on substantial volume and seems to have the momentum to take it back to challenge $38 again.

Chubb (CB) has a descending wedge formation and has been undergoing distribution throughout November.

Despite the breakout patterns in many energy sector charts we noticed quite serious negative divergences in the chart for DTE

Chesapeake (CHK) exemplifies the breakout pattern seen in many energy related stocks.

EOG Resources (EOG) shows another breakout with twice the average daily volume and steeply slanting positive money flow.

Flextronics (FLEX) has some positive divergences and may be attempting to re-connect with the converged moving averages above.

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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