In the wake of positive news flow and underlying strength in market internals the S&P 500 (^SPC) achieved a new six year high and left the bulls firmly in control. The pattern that has persisted for many weeks - a periodic testing of the 20-day EMA followed by renewed strength - suggests that institutions are still seeing weakness as an opportunity to augment their portfolios.

Amongst the supporting factors for yesterday's rally was a significant decline in Treasury yields. However, the yield on the ten year note has reached a level where some consolidation is probable.

The Nasdaq 100 (^NDX) put in a relatively strong performance yesterday as it gained 1.7% but the index notably failed to penetrate the 1820 level and also marginally failed to tag the intraday high from February 9.







TRADE OPPORTUNITIES/SETUPS FOR THURSDAY FEBRUARY 15, 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.

Take Two Interactive (TTWO) performed very well for us last week and the stock continues to act bullishly. The chart is worth another look as the formations developing in January were clearly pointing to the recent strength.



Thermo Electron (TMO) recorded an inside day in conjunction with the 50-day EMA and potential chart support. It would be worth monitoring the stock to see whether the support holds or whether the dissipation in momentum and money flow will lead to further weakness.



Quanex (NX) has recorded several shooting star candles recently and there is evidence of distribution and waning momentum.



The chart for Lowe's (LOW) reveals negative momentum and money flow divergences.



The volatility bands for Dell Computer (DELL) are becoming very constricted and it would seem that a range expansion session is 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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