The Nasdaq Composite index (^IXIC) closed out the first quarter at almost exactly the 20-day EMA value. The last three trading days of the quarter saw virtually no change in the closing prices recorded. With the customary end of quarter portfolio cosmetics now out of the way there may be a renewed testing of the resolve of the bulls in coming sessions.

The yield on the thirty year treasury bond (^TYX) closed at 4.85% on Friday and in the last three sessions has risen above the 200-day EMA which puts it ahead of the pace in comparison with the ten year yield. There has been a noticeable steepening of the yield curve at the long end over the last few weeks which could be a reflection of more restrictive credit market conditions in the wake of the problems in the mortgage sector.





The weekly chart for the housing index (^HGX) reveals how last week’s trading produced a significant break below an upward trend line that runs through the weekly lows extending back for almost one year and extending back to the May/June 2006 correction.



The Bombay Sensex index (^BSESN) lost almost five percent in Monday's trading as an interest rate hike and central bank efforts to rein in credit expansion and inflationary pressures surprised the market. As can be seen, the index came to rest just above a critical juncture on the daily chart.



TRADE OPPORTUNITIES/SETUPS FOR MONDAY APRIL 2, 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 Paychex (PAYX) illustrates a pattern that we cover in some detail in Long/Short Market Dynamics. There are two nested reaction channels following the serious "rupture" that took place in late February. After failure to penetrate the pivotal $41 level the stock has begun a downward avalanche that failed to find any support at the 200-day EMA



There are some echoes of the chart for PAYX in the nested bear flag formations for Qiao Xing Universal Telephone Inc (XING). The $18 level proved to be a formidable hurdle and we shall be monitoring today for a possible close below the 50-day EMA which could be a precursor to a bigger correction.



Hansen Natural (HANS) shows a bullish range expansion session on heavy volume following the inside day recorded last Thursday. The pattern looks as though a continuation up to the early February high is likely.



LSI Logic (LSI) peeked above a range that extends back to mid January. The very heavy volume in Friday's session suggests that the upward momentum may be sufficient to validate a breakout pattern in the next few sessions.



Hasbro (HAS) may be headed down towards the late February intraday low close to $27.60.



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 guarantee 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.