I will be discussing some of the trading strategies from my new book Long/Short Market Dynamics today. This free, online event takes place on Wednesday, April 11, at 1:00 Eastern Time (10:00 Pacific Time). To register for the event, click here.

After our extended Easter break, we have returned to see that the charts have produced little action since we last published a week ago. Volume has been light for several sessions and the chart patterns are indicating that there is a growing sense of directional indecision amidst the underlying bullish backdrop. The chart for the Nasdaq Composite (^IXIC) reveals that slow upward progress has been made but the index still faces resistance as it tries to move beyond the 2400 level.



The chart for the banking index (^BKX) reveals a fairly severe price congestion pattern as the closes move even more tightly into the apex of a triangular formation. This kind of chart pattern often gives way to a dramatic range expansion session. If the direction is upward which the underlying bullish market conditions would seem to favor then we could see an overall lift for the broad indices to new multi year highs in the near future. If the direction is downward, which is a possible development if the problems besetting the mortgage sector take another turn for the worse, this could present a real shock to the overall market,



One of the most striking changes over the last few sessions was the upward gap on the yield for the ten year Treasury note which was recorded in Monday’s trading following the robust employment report that was released on Friday when the market was closed. Yields now look set to tag the upper channel between 4.6% and 4.8%.



The exchange traded proxy for the price of gold, GLD, produced a tiny Doji formation yesterday on much reduced volume. The precious metal is approaching an important chart juncture near to the late February high. We will be watching for evidence indicating that a lower high might be forming.



TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY APRIL 11, 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.

Automatic Data Processing (ADP) has a rather steep pullback channel in what appears to be a possible bullish flag setup



The pattern for Best Buy (BBY) shows range expansion on heavier volume following the inside day from last Thursday. The break below the two moving averages is also part of a bearish looking pattern.



Geron (GERN) experienced a strong upward move with range expansion and strong volume that could be a precursor to further upward momentum, although a period of temporary consolidation may arise as the stock approaches the $8 hurdle.



Komag (KOMG) has a bullish pullback channel following the heavy volume range expansion session on March 23rd. An upward price target would be $36 which coincides with the 200-day EMA.



Omnivision (OVTI) has another pullback pattern following the strong upward surge on heavy volume from March 23rd and 26th.



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
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