There was a divergence in the performances of the broad equity indices yesterday as the DJIA pulled ahead while almost all of the other indices retreated. As noted yesterday the Russell 2000 (^RUT) has been reticent to break out decisively to a new high during the ebullient mood of the last few trading sessions. The decline yesterday of 0.9% occurred after Friday's reluctance to really take on the previous high from June 4th. There is no denying that the overall market is well supported (perhaps primarily by traders buying back short positions) but the divergences amongst the indices are always worth monitoring for signs of short term trading opportunities.



I thought that it could be useful to look at the Shanghai index (^SSEC), which from time to time becomes topical in the US financial media. The pattern that has been developing over several weeks is a clear triangular formation and with evidence of a lower high in mid-June we should keep an eye on this index for a potential breakout.



Transocean (RIG) caught my attention in yesterday’s commentary based upon the signs of distribution and negative momentum divergences. The stock actually retreated by 1.6% in yesterday’s trading and in reviewing the sector fund, OIH, there is some suggestion that others in the oil services area may be due for a temporary rest.



TRADE OPPORTUNITIES/SETUPS FOR TUESDAY JULY 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.

Tibco Software (TIBX) tested all three moving averages in yesterday's session and appears to have found buying support with above average volume.



Despite a powerful rally at the end of last week, Wells Fargo (WFC) still has some indications that an intermediate top may be forming.



Sonus (SONS) has a descending wedge formation and may, in the intermediate term, be headed towards the area of chart support at $7.60



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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