The markets spent the early part of the morning yesterday waiting for some direction and in the absence of any obvious desire to move further forward a mildly negative bias appeared in mid session which carried through to the close. The Nasdaq Composite (^IXIC) registered a narrow range session which as the chart below indicates was an inside day. Occurring immediately following the doji candlestick from Friday we sense that a range expansion may be imminent. The market is approaching important levels - DJIA at 13000 and the S&P 500 at the historic high - and there were some signs yesterday of distribution taking place amongst institutional favorites. We discuss Pfizer (PFE) as one example of this below.

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The chart for the gold index (^GOX) intrigues us. A sell off right on cue at 156, the potential breakout level, occurred early last week. One would expect that the underlying dynamics will produce another rally attempt but the caliber of any such effort may give some clues regarding the sustainability of the current strength in the European currencies.



The chart for the CBOE Volatility index (^VIX) reveals an unusually large triangular formation. The need for a resolution of this pattern highlights our earlier observation that a range expansion session off the equity indices may be imminent.



TRADE OPPORTUNITIES/SETUPS FOR TUESDAY APRIL 24, 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.

Apple (AAPL) appears to be headed towards a retest of the $96 level which was seen at the turn of the year and which encountered resistance at the end of March.



Peabody Energy (BTU) shows range and volume expansion following Friday's inside day and break above the range that has been in place since last December. The longer-term chart suggests that $54 may be the next target.



We mentioned that some institutional favorites are showing early evidence of beginning corrections. Pfizer (PFE) has recorded two days of increased volume as the stock after peeking above the mid January high appears to have had an attack of vertigo.



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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