The last two sessions have seen subdued volume for the index proxies. The volume for each of SPY,QQQQ and IWM reveal levels that are about 2/3 of the average daily volume (15-day SMA). In addition many of the key charts we review - indices, sectors, and Treasury yields are displaying signs of indecisiveness. We sense that market participants may be having some difficulty in digesting the true import of the economic data, the interest rate outlook and the plethora of earnings reports.

The daily chart for the Nasdaq 100 (^NDX) underlines the kind of indecision we have discussed. The last three sessions present a variety of spinning top formations - all of which are within a tight range as indicated by the box we have drawn on the chart. This kind of congestion could be the precursor to a decisive expanded range session in the near future.





The chart for the Euro shows an interesting hammer candlestick as the currency reached down to the pivotal $1.29 level.



TRADE OPPORTUNITIES/SETUPS FOR TUESDAY FEBRUARY 6, 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 Honeywell (HON) particularly expresses the tentative nature of trading over the last three sessions. The volume has been subdued and some negative divergences are setting up.



Bemis (BMS) has a bearish pullback channel and could encounter resistance at the confluence of the 20- and 50-day EMA's.



Varian Medical Systems (VAR) could run into another bout of selling as it approaches $49.



The daily chart for Stem Cells (STEM) reveals a narrowing of the volatility bands and as there is evidence of accumulation an upward breakout 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.

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