The chart formation for the S&P 500 (^SPC) reveals the possibility that a lower high plateau may have formed following the recovery from the early June sell-off. The downthrust yesterday took the benchmark index as well as the smaller cap Russell 2000 (^RUT) index down by 1.4% and was on significantly increased voume from the previous two sessions.

The chart for the Dow Jones Utilities (^DJU) is showing the kind of technical trading patterns that should provide us with useful clues as to how asset allocators are responding to the changing interest rate environment. The recovery last week took us back almost exactly to where we expected - at the convergence of the two short term moving averages - and in yesterday's action we headed back towards a test of the recent lows.

It will be instructive to monitor whether the upward slope to the lows of the last few sessions is about to be violated in coming sessions.





In yesterday’s commentary we featured, XLP, which represents the consumer staples stocks and commented on its relative weakness and declining momentum. The action yesterday highlights the fact that the sector appears to be on the verge of slipping below the second of two trend lines of potential support.



TRADE OPPORTUNITIES/SETUPS FOR THURSDAY JUNE 21, 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.

Perkin Elmer (PKI) has a chart which typifies many large institutional favorites. A slightly lower recent high has been registered (at least from our current vantage point) and the price action appears to be at variance with the underlying dynamics which are detriorating.



Smurift Stone Container (SSCC) has penetrated a long standing line of resistance on the chart and providing that the overall market remains reasonably cooperative we should see further gains.



Amazon (AMZN) appears to be over extended and vulnerable to a correction which could see it testing the 50-day EMA.



Wells Fargo (WFC), as expected, ran into resistance yesterday at the top of its range



Limited (LTD) managed to record a green candlestick, albeit a spinning top, despite yesterday's sell off, and appears to have established a beach head above the line of recent resistance.



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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