The S&P 500 chart reveals a spinning top formation that straddles the 200-day EMA. The candlestick pattern exemplifies the kind of indecisive nature of trading yesterday amidst a rapid alternation of sentiment based on the latest remarks from a Fed governor, upbeat analyst comments on some technology stocks and the continuing unease in the money markets. News that a British investor had built a stake of more than seven percent in Bear Stearns (BSC) did not inject as much pace into the stock as might have been expected and there were some that questioned whether the stake was a positive for the bank as the presence of the new stakeholder could act as a disincentive to a sovereign or strategic financial investor that could contribute more to the balance sheet.

Until the FOMC meeting next week (unless we get an "emergency" announcement beforehand) the market is likely to remain skittish and more disposed towards intraday trading strategies than suited to position traders.



The consumer discretionary sector is in the spotlight at the moment and the attrition in the retail index (^RLX) is bringing us closer to a retest of the lows registered in mid-August.



The exchange traded sector fund XLY contains a cross section of stocks from across the consumer discretionary sector in addition to the retailers. Some homebuilders (LEN, PHM and KBH) are intermingled with media stocks (TWX and NYT) as well as hotels and restuarants. Volume and momentum do not appear to be that constructive and for sector players that are reckoning on a consumer slowdown this fund represents a good shorting vehicle. But as such the fund can be likely to squeeze plays especially as the August 16 low is approached.



McDonald's (MCD) is looking constructive from a money flow point of view and the rising wedge pattern appears to be be pointing to a potential break above the recent congestion around the $50 level.



salesforce.com (CRM) looks set to test the $46 level which represents an area of resistance but the last three sessions have provided a break above all three moving averages on above average volume.



Schnitzer Steel (SCHN) appears to have registered a double top formation



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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