The Nasdaq Composite has recently been the index we have been focusing on but today wanted to shift the focus sligthly towards the exchange traded proxy for the Nasdaq 100 index, QQQQ. One notable feature from yesterday's trading was the remarkably subdued volume as it barely registered one half of the average daily volume over the last fifteen sessions.

The chart segments for the MACD and MFI inidcators are also suggesting that the recent price performance has been diverging from the fading momentum and money flow dynamics.

Once again the US markets will have to assess the contunuing attrition in the Chinese market as the Shanghai index fell for the third straight session.



The Russell 2000 index (^RUT) eked out a small gain of 0.2% yesterday which placed it once again in record high closing territory. Yesterday's range fitted entirely within Friday's range and thereby created an inside pattern.



The remarkable strength in the retailing sector is well illustrated by the following chart of the sector fund, RTH, which over the last two sessions has clearly broken above the late February highs. In line with the rest of the market yesterday’s volume was also subdued.



TRADE OPPORTUNITIES/SETUPS FOR TUESDAY JUNE 5, 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 Pactiv Corporation (PTV) has a well defined downward sloping wedge formation which is often a precursor to a downside breakout. Yesterday's tiny doji formation also shows a close just below the the two shorter term moving averages. We suspect that there will be a test of the 200-day EMA around $32.



Verizon (VZ) has moved up quite steeply since breaking above its trading range in early May. There are negative divergences now appearing in momentum and money flow.



Worthington Industries (WOR) has climbed an ascending pullback channel and there may soon be a resumption of the selling pressure that produced the gap down on May 24.



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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