The S&P 500 (^SPC) moved ahead by 0.6% to close above the 20-day EMA again after the last two sessions when the closes were marginally lower than this indicator. Volume for the exchange traded proxy SPY was above average and, despite the fact that some participants are sidelined waiting for the FOMC decision, there was a fair amount of decisive activity yesterday. Amongst the 600 most active stocks that we monitor 25 of them recorded volume that was at least twice their 15-day moving average volume.

The Nasdaq 100 (^NDX) has traded very narrowly over the last three sessions and closed very close to the 50-day EMA. While there is little expectation of any surprises from the FOMC decision an expanded range is to be expected in the coming sessions.





Another chart that appears poised to make a strong directional move is for the gold and silver sector index (^XAU). In reviewing some of the stocks in the sector the chart for Newmont Mining shows some recent accumulation activity.



TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY JANUARY 31, 2007

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 EchoStar (DISH) is revealing some negative divergences and a move down to the 50-day EMA seems probable.



Darden Restaurants (DRI) has a converse pattern to DISH with evidence of positive divergences.



Also looking constructive on the long side is the recent momentum and volume characteristics for Xilinx (XLNX).



We cited the flag like pattern for Crown Castle International (CCI) in Monday's column and yesterday's tiny inside day formation on low volume suggests that a resolution of the pattern could be imminent.



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.