The S&P 500 (^SPC) moved up 0.9% to close at a new multi-year high just above 1514. The DJIA registered yet another all time high at 13487. There has been an expansion of the intraday ranges for the indices pointing to an uptick in potential volatility and other divergences persist.

The Russell 2000 (^RUT) closed with a 0.7% gain yesterday repeating the pattern of relative under-performance with respect to the larger cap issues. During the session the index approached the support/resistance level at 810, but it would be misleading to see yesterday's trading as constituting a test of the level as stocks never really came under pressure during the day.





The exchange traded fund for the utilities sector, XLU, has registered a series of tiny candlesticks in conjunction with the waning momentum and money flow.



TRADE OPPORTUNITIES/SETUPS FOR THURSDAY MAY 17, 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.

Lehman Brothers (LEH), mentioned earlier in the week, closed down another 0.7% yesterday on a pickup in volume. As the chart shows the stock is now below all three EMA's that we track.



Brush Engineered Materials (BW) has a very clearly defined pullback channel which may be about to run into resistance.



The chart for MEMC Electronic Materials (WFR) indicates the possibility that the factors that produced the precipitous drop at the end of April may inhibit the efforts to move decisively back above $60 in the near term.



Timberland (TBL) surged almost five percent on very heavy volume on May 7, and the pullback pattern and the positive MFI characteristics could be pointing towards a resumption of the upward momentum in coming sessions.



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.