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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (45009)	9/30/2008 9:57:55 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70932

TradewithForm space by Clive Corcoran September 30, 2008 space red space One of the most extraordinary charts from a historic day of trading is the one for the Nasdaq Composite (^IXIC) which almost dropped 200 points and registered its third largest decline ever with a 9.1% drop. The reason why I find it especially alarming is that the markets have been precoccupied with sorting out the debris from toxic assets and de-leveraging but seemed to have been overlooking lots of evidence that consumers are withering. The focus today will be on letting the charts themselves reveal the dramatic and precarious state of the capital markets. chart The KBW banking index (^BKX) fell back a breathtaking 20% plus and violated a critical trend-line from the July low. If the smart money is right this is the time to be buying within the sector - the key is to know which banks will be left standing when it is all said and done. chart The CBOE Volatility Index surged to almost unprecedented levels yesterday I found the following commentary useful from a site dedicated to the volatility index The VIX set a new record today, with a closing price of 46.72. This record surpassed the previous record of 45.74 from October 8, 1998, which came during the Long-Term Capital Management fiasco. Today also saw an intra-day high of 48.40 that is now the fifth highest intra-day VIX reading, behind a 49.53 reading also from October 8, 1998. For the record, October 8th was toward the end of the panic associated with LCTM. It was the 18th day in a 1 1/2 month period that the VIX traded over 40. Following the record readings, the VIX hit 40 on each of the next four days, then did not trade in the 40s again until after the 9/11 World Trade Center attacks. chart The Russell 2000 (^RUT) did not (yet) break decisively below the previous lows this year. chart TRADE OPPORTUNITIES/SETUPS FOR TUESDAY SEPTEMBER 30, 2008 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. For full details on time horizons, risk management and hedging techniques please visit tradewithform.com I shall repeat my comments from yesterday - "Threats of financial contagion are crippling the investment grade corporate bond sector. LQD would be worth monitoring today." chart Last week's suggestion that the sector fund GLD was a buy has proved timely. Apart from nearly all of the inverse and leveraged exchange traded funds it was one of the very few to end with a green candlestick yesterday. chart Yesterday's comment about IYE was not well timed and highlights the dangers of using certain indicators when we are in uncharted waters. chart ABOUT CLIVE CORCORAN red space Clive Corcoran, publisher of tradewithform.com, is based in London and has been an active trader for many years on both sides of the Atlantic. He is a trading software developer and consultant and focuses on risk reduction and market neutral strategies for portfolio managers. His book Long/Short Market Dynamics: Trading Strategies for Today's Markets was published by Wiley in early 2007 and his articles have appeared in Traders' Magazine and Active Trader. He is an acknowledged communicator on the capital markets and has been a featured speaker at trading expos and workshops. He can be contacted at clive.corcoran@tradewithform.com