Yesterday's subdued action in the equity indices was accompanied by very light volume. SPY barely achieved half of its average daily volume and QQQQ also registered a quiet session. The chart formation for the Russell 2000 (^RUT) shows a tiny body Doji candlestick that was also an inside day - a pattern that is often a precursor to range expansion.

The banking index (^BKX) broke to an all time high yesterday as it surpassed the previous highest close by .05 points.

After a relentlessly upward path, the index for the primary Indian exchange (^BSESN) is showing the first corrective action to bring it below its 20-day EMA since early September.

TRADE OPPORTUNITIES/SETUPS FOR TUESDAY DECEMBER 12, 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.

The chart for Air Products and Chemicals (APD) is at a critical juncture as it has met resistance at $72 with some evidence of fading momentum but the money flow chart would keep us from being bearish at this stage.

As we have highlighted on the chart for Avid Technology (AVID) all of the big volume sessions since mid September have been associated with long red candlesticks followed by recovery efforts that have eventually run into resistance at the 200-day EMA.

Verisign (VRSN) has entered a sideways pattern following its upward surge on heavy volume in late November but it may attract further buying interest as it consolidates near current levels.

Autozone (AZO) will probably extend its upward momentum following its recent breakout.

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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