2008 Market Holiday Schedule

Hey Gang!

I hope that you are having a wonderful holiday season thus far! I will be back with regular posts beginning next Monday, but thought you may like to see this coming year's market holiday schedule. It is as follows:



For a page you may bookmark with this information, go to http://www.tradingfrommainstreet.com/marketholidays.html

All my best,
Toni

Market Inches Higher into the Holiday Weekend

Good morning! As trading wrapped up on Wednesday afternoon the indices were favoring upside into Thursday morning, but without enough of a correction to easily push the ES (S&P 500 EMini) to new highs. I walked through a couple of scenarios in yesterday's column, dealing with the previous 15 min highs as resistance, but neglected to name the one whereby we saw a gap into that level to then allow for that larger intraday pullback I was wanting to see before the market attempted to really break higher again. So, we still ended up with the same outcome, but the pullback came faster than it would have had the market not gapped and instead had to climb throughout the morning.



The gap itself was the strongest in the Nasdaq ($COMPX) in that it busted the index through the highs of the prior several trading days, but it had a higher level base into the close than the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) had. The S&Ps gapped right into Wednesday's morning highs and price resistance, while the Dow gapped into the afternoon resistance. These opening levels held and a small congestion in the first 15 minutes of so of the day gave way to a strong round of selling in the S&Ps and Dow. The Nasdaq also broke lower, but lacked the momentum of the other two indices.



The morning momentum slowed after the S&Ps and Dow closed their gaps. At the same time the Nasdaq came into support from Wednesday afternoon highs and the 5 minute 20 period simple moving average. A bear flag formed at those support levels and the market continued to sell off into noon, although the Nasdaq merely made lower highs and held the lows. The slower selling into noon with a lot more overlap in all three of the major indices created a bullish bias once again for the afternoon. The morning drop also was enough of a flush to make it easier to sustain upside on the larger 30-60 minute time frames, which is what we were lacking heading into the session.



The S&Ps and Dow crept through the upper resistance of the second drop of the morning into noon. The lack of momentum shift on the 1-2 minute charts allowed the indices to flush again on a 2 minute time frame into 12:30 ET. This last flush into the larger 15 minute support at the previous day's lows in the S&Ps and Dow and the 15 minute 20 sma in the Nasdaq was a perfect opportunity for the bulls. The market popped quickly, stalled only a few minutes and then began a steady rally back into the earlier morning price levels. The Nasdaq, which had outperformed throughout the session, easily broke through the morning highs.

Resistance hit again at about 14:30 ET and from that point into the close the market remained range bound, but began forming another buy setup on the 5 minute time frame. It triggered in to the close and continues steadily higher as I write this (2am). At the time of the closing bell, however, the Dow was only up 38.37 points. It ended the session at 13,288. Technology led the move with 1.6% gains in IBM and a 2.1% gain in MSFT. The S&P 500 rose 7.12 points during regular trading and closed at 1,460. The Nasdaq Composite gained 1.5%, outshining the Dow and S&Ps combined. This was a 39.9 point move which closed at 2,640. ORCL and RIMM were two of the other major tech leaders. I am anticipating a slower Friday, but the potential has increased for a trend day or at least for a good chunk of the day as we come out of the range that has been in place since the 17th.

NOTE: I will be taking time off for the holidays while my kids are on winter break. (Very hard to trade with kids running around!) So, my last column of the year will be for Monday's session and then it will resume following the evening of the 4th. I hope you all have a wonderful holiday season!

Holiday Trading Sets In

Good morning! The market was incredibly choppy in Wednesday's session. The day began with very hesitant buying following a rather uneventful open. The higher prices climbed, the less sure they became. Volume declined, upside momentum slowed, and when the 10:45 ET reversal period hit the bulls began to head for the side exits. Momentum increased the lower prices fell. Support hit at 11:30 ET, but by that point the selling was so strong that the indices could not easily bounce back and instead formed a small bear flag to take prices even lower into the more substantial reversal period of 12:00 ET.



The slightly lower lows into noon were a first step for a larger correction off the lows in the indices. The market moved higher into the early afternoon and the 5 minute 20 period simple moving average, but then another tug-of-war began. Prices fell, but so did the volume as the indices hugged resistance, sliding lower in a choppy trend channel. A final flush to new lows at 13:45 ET forced out those with stops under the morning lows and allowed the market to pop out of the 14:00 ET reversal period. This reversal was the morning short setup reversed, but on a slightly smaller scale.

The market found strong price resistance as the indices came into the morning's congestion and breakdown levels. The strong buying began to wane and momentum shifted for the third time on the 15 minute charts. Prices again rolled over into the close, holding the day's range on smaller versions of previous price action.



When the closing bell rang, the result of this roller coaster ride was a virtually unchanged market in terms of price. The Dow Jones Industrial Average ($DJI) lost 25.20 points on Wednesday, closing at 13,207.3. Slightly more than half closed with gains. Walt Disney Co. (DIS) led the decliners with a loss of 2.3%, whereas Intel Corp. (INTC) gained 1.1%. The S&P 500 lost 1.98 points. It closed at 1,453. Unlike the Dow and S&Ps, the Nasdaq Composite ($COMPX) gained ground. It rose 4.98 points and closed at 2,601.01. Crude oil futures also rose on Wednesday after a string of steady losses. They closed higher by $1.16 at $91.24/barrel.

As we head into Thursday I am a bit more on the bullish side intraday, but it's not the best action yet. I would have liked to have seen a bit more downside first to flush things out a bit more before a bounce, and that is still possible, but the momentum within Wednesday's congestion has it favoring upside. I want to see it chop in the morning first before an attempt at a break. Otherwise if it just chops higher again into the morning and even into noon then we can see another strong downside flush into the second half of the day fairly easily. This would be the case especially if the 1475 zone holds in the ES (S&P 500 EMinis) on the 60 minute chart with a slower move into that level this time around than when it hit coming off the lows on the 18th.



NOTE: I will be taking time off for the holidays while my kids are on winter break. (Very hard to trade with kids running around!) So, my last column of the year will be for Monday's session and then it will resume following the evening of the 4th. I hope you all have a wonderful holiday season!

FREE ONLINE TRADING CLASSES: Don't forget to join me for this Thursday's free online trading seminar! Adjustments have been made to the login instructions to assist those unable to connect during our first class. For more information and logs to my last session, go to http://www.tradingfrommainstreet.com/TradingClasses.html.

Market Post Gains After Weak Morning

Good morning! The market gave us both the lower lows we were looking for as well as the greater price overlap from one day to the next on Tuesday. The session began with a decent upside gap into the open, but such gaps rarely hold in the indices themselves and the selling we had been expecting set in fairly quickly. Opening highs held within a few ticks in the morning. The first continuation lower took place into 10:00 am ET into the 10:15 ET correction period. Another bear flag formed at that point, but the momentum did not increase until the breakdown around 11:15 ET. When the morning congestion gave way to new lows on the day the market plummeted. Sellers took over on increasing volume into the 12:00 ET reversal period.



The 12:00 ET reversal period held very well for the market. The exhaustion move on the 5 minute led to a very slow turnover since the momentum into the lows was very rapid indeed, but the bulls gradually peaked their heads out, encouraged as the day progressed by more news out of the Fed on plans to tighten the lending practices to head off any new lending crisis such as the one that has struck the economy over the last couple of years. The proposal includes tighter rules on prepayment penalties and verification of the borrower's income to keep people from getting in over their heads based upon a wish and a prayer.



The market continued higher throughout the first half of the afternoon at a steady clip before hitting resistance at the 14:30 ET reversal period. At that point the indices had struck the morning highs, which served as strong price resistance. The momentum in the Nasdaq had begun to shift at about 13:30 ET. Although the Dow and S&Ps formed solid bull flags into the 14:00 ET correction period, the Nasdaq made a series of higher highs. With the third high, the Nasdaq had completed the formation of a reversal pattern, which triggered at about 14:30 ET. The other indices followed the Nasdaq in its correction, but while the strength of the Dow and S&Ps helped it retest highs in the final 30 minutes of the day, the Nasdaq hugged the 5 minute 20 period simple moving average and attempted to break lower into the close on an Avalanche short setup.



On Tuesday the Dow ($DJI) closed higher by 65.27 points at 13,232.5 (+0.5%). American International Group Inc. (AIG) led the move, adding 3.1% by the bell. 21 of the 30 Dow components posted gains. Two of the main losers were in the financial sector: Citigroup Inc. (C) (-1.3%), and J.P. Morgan (JPM) (-1.4%). The S&P 500 ($SPX) rose 9.08 points on the day, or 0.6%. It closed at 1,454.98. The Nasdaq Composite ($COMPX) had the strongest showing, with more room to move after the steeper selloff in the previous session. It gained 21.57 points, or 0.8%, and closed at 2,596.03. There is still room for another lower low on Wednesday, but I would expect a bit of upside and continued overlap into the weekend as volume declines.


FREE ONLINE TRADING CLASSES: Don't forget to join me for this Thursday's free online trading seminar! Adjustments have been made to the login instructions to assist those unable to connect during our first class. For more information and logs to my last session, go to http://www.tradingfrommainstreet.com/TradingClasses.html.

Market Follows Through on Bearish Bias with a Trend Day

Good day! The the market experienced another day of strong losses on Monday to kick off the new trading week. This followed through on the daily continuation short setup that had been forming at the end of last week and into this, which I detailed in this week's Market Action Video (http://www.tonihansen.com/marketactionvideo/). The odds were high for a trend day on the downside on Monday and the market did not disappoint. The day began with a moderate downside gap and continued lower into the closing bell, ending the session at the day's lows.

The Dow Jones Industrial Average ($DJI) shed another 172.65 points, or 1.3%, on Monday, closing at 13,167.2. Caterpillar Inc. (CAT) was one of the largest decliners, falling 3% after a downgrade by Morgan Stanley. Only a couple of the Dow's 30 components managed to post gains. The S&P 500 ($SPX) and Nasdaq Composite ($COMPX) also fell throughout the day. The S&P 500 lost 22.05 points, or 1.5%, and closed at 1,445.9. The Nasdaq, bogged down by heavy losses in technology, landed lower by 61.28 points, or 2.3%. It closed at 2,574.46. Research In Motion Ltd. (RIMM) fell 5.4% on the day, while Micron Technology Inc. (MU) lost 5.7%. Other top losers included, AAPL, DRYS, BIDU, AMZN, GOOG, FSLR, EEM, NOV, IR, and FCX.



Market data and news throughout the session on Monday helped add fuel to the fire to continue to push prices lower, although the volume on the day was not substantial and lacked strong panic or urgency. This suggests that it can easily continue into Tuesday. In fact, the selloff was rather orderly. Ahead of the open the New York Federal Reserve Bank reported a slowdown in factory growth in December. Meanwhile, the Commerce Department pointed to a narrowing current-account deficit in the third quarter. Later on in the day Moody's warned of downgrades in leading bond insurers and former Fed-chairman, Alan Greenspan, warned of a 50/50 chance of a recession. President Bush also spoke of economic challenges during a speech in Fredericksburg, VA. All-in-all, not very hopeful news to a market already on edge.



Following the opening gap in the indices, the market inched lower with a great deal of overlap from one bar to the next, particularly in the Dow and S&Ps. The Nasdaq experienced the most steady selling, so while the slower pace of the S&Ps and Dow actually contributed to a buy trigger around 10:15 am ET on an upside channel break on the 5 minute time frame, the Nasdaq merely fell into a trading range along the day's lows to form a bear flag while the other indices advanced. Both the S&Ps and Dow had their strongest upside on the initial break of the trend channel from the first 45 minutes of the day. They then had a more difficult time breaking to new highs. Finally, after a third attempt, the ascending wedge formation triggered a short setup, which I took at 1473.5 in the ES. This corresponded to the bear flag trigger in the Nasdaq and the indices fell steadily into noon.



The morning lows served as support for both the Dow and S&Ps, while the Nasdaq completed a move equal to the initial decline out of the open, leading to another form of price support which hit just prior to the 12:00 ET correction period. The support zones held in all three indices and the market pulled up very slowly into the 15 minute 20 period simple moving average as volume declined, creating another short setup in the form of a bear flag.

The market turned lower again right at the 13:00 ET reversal period and the strongest wave of intraday selling began. It formed a continuation pattern which took it to lows at the 14:00 ET reversal period. The momentum on this continuation was slower in the Dow and S&Ps, however, and a channel break created a small buy setup on the 5 minute time frame, although the initial resistance zone from previous highs held, along with the 5 minute 20 sma. The selling then continued at a choppier rate into the final 90 minutes of trading. As I mentioned earlier, further downside into Tuesday or even Wednesday is going to be in line with previous price moves of this sort, however, we should expect to see more overlap intraday in prices and lighter volume heading into the holiday.


FREE ONLINE TRADING CLASSES: Don't forget to join me for this Thursday's free online trading seminar! Adjustments have been made to the login instructions to assist those unable to connect during our first class. For more information and logs to my last session, go to http://www.tradingfrommainstreet.com/TradingClasses.html.

Utilizing Support and Resistance Levels - Part 1

Excerpt from Dec. 6th's class:
Complete logs available at http://www.tradingfrommainstreet.com/classes/Class_SRPart1.html

Next Class: Thursday, December 20, 2007 at 4:15 pm ET
http://www.tradingfrommainstreet.com/TradingClasses.html



Utilizing Support and Resistance Levels - Part 1
Applying basic price levels to identify support and resistance levels.

OK gang... let's let going... First of all... thanks for coming! This is the first of a 4-part lecture series on support and resistance. For those of you who have purchased my CD series, the material in this series is going to be a bit of refresher. It will cover some of the main points in the S/R segment of that course, but I have completely new charts, etc., so it will help possibly clarify some of the points as well. I will take questions following the class, so please hold off until then since often I find that many of the questions people have mid-way end up answered by the time I am done anyway. :)

Simply put, support and resistance levels are places in the market when the current trend or price move that is in play in the market will either turn or stall. The traits of support and resistance levels apply to all type of markets and time frames, so the concepts in this class will figure into any market you trade.

Now, when thinking of support and resistance levels, it is very common for most people to think of them in terms of absolute price levels. For instance, if they are looking at $50 as a resistance levels, they mean exactly $50. On the other hand, if they are looking at moving averages as a support level, they will check to see what the exact price of the moving average is, such as $50.78.

In reality, support and resistance levels are not exact prices, but rather price zones. So, if the resistance level is $50, then it is actually the zone around that $50 level that is the resistance. The stock may hit only $49.87 or it may hit $50.25 and still hold the $50 as price resistance.

The main factor in determining exactly how much the exact prices are tested by is how quickly or slowly the prices move into that resistance zone. For instance, if the zone hits very quickly on a large momentum surge, then it is more likely to hit that $50.25 level. This is also the case if the stock is a rather volatile one with a wide price range intraday. If the security spikes higher and does not quite hit the price resistance, such as a spike into $49.70, then it may round off into $50 with slightly higher highs and never exactly touch the $50 price resistance zone before turning over due to the slowdown in momentum into that resistance. The larger the time frame, the greater the price zone is as well. A resistance zone at $50 on a weekly time frame may have a range of $1 on each side of $50. Where traders tend to run into trouble is in thinking that because the stock has traded over $50 by more than just 10 cents that the $50 has broken, so we often hear of people "buying the highs" or "shorting the lows" in the case of support.

For today's session I am going to focus on 4 main types of price support and resistance. They are WHOLE NUMBER SUPPORT AND RESISTANCE, PRICE PIVOTS, PRICE CONGESTION ZONES, and EQUAL OR MEASURED MOVES. I will begin with the whole number support/resistance (s/r).

Whole number support and resistance refers to the price levels most of us have in our head when we think of support and resistance right away. They are levels like the 14,000 that we have heard so much talk of in recent months. CNBC does not get excited by the Dow hitting 13,984. We do not hear about oil in terms of the cents per barrel, but rather it's proximity to breaking the whole number level. When a security, or the market overall moves into these larger price levels, rounded to either the dollar in most stocks, or the 10s, 100, etc. people tend to react most often at those levels. It's second nature. My third grader has just spent her first semester in school learning how to average and to round up or down. That is then taken with us throughout our lives.

FIGURE 1 - $DJI Daily
http://www.tradingfrommainstreet.com/images/class/SR_Price_20071206/SR_PriceWholeNumberDJI.gif



For futures traders a common level we will notice in the NQ is how that tends to gravitate to moves of 5 points at a time and stall at or about the 5 point increments. In the YM the 10 point increments, and particularly the 100 point levels catch people's attention and reversals or consolidations tend to form at those zones. In the chart of the Dow Jones Ind. Average (Figure 1) we can see how it often moves towards those 100 point increments as well. The 12,000 and 14,000 level are the most pronounced in this case, but many of the places it stalls at are almost exactly at a 100 point price level.

Even though at "D" the Dow technically broke 14,000 in terms of the exact price (yet held the 14,200 securely) when we think of the Dow in terms of a larger time frame move, we have yet to see the 14,000 zone penetrated. At 14,200, the Dow was STILL AT the 14,000 price resistance zone. What I am looking for at this point is a third test of that zone, maybe even a slightly higher high and then a larger correction where we can see a stronger reaction to this price resistance zone on a larger time frame.

... continued at http://www.tradingfrommainstreet.com/classes/Class_SRPart1.html

Next Class: Thursday, December 20, 2007 at 4:15 pm ET
http://www.tradingfrommainstreet.com/TradingClasses.html

© 2007 Bastiat Group, Inc.

NOTE: COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT WRITTEN AUTHORIZATION FROM TRADING FROM MAIN STREET IS A VIOLATION OF COPYRIGHT LAW.

DISCLAIMER: Trading in commodities and securities may not be suitable for all individuals. Consult your broker or other professional to determine your suitability. The discussions provided by Trading From Main Street are for educational purposes only and should not be taken as a recommendation to buy or sell the referenced security. Past performance is not indicative of future results

Earnings and Economic Events This Week

Economic Reports and Events This Week


Monday, December 17, 2007
8:30a.m. 3Q Current Account Balance.
8:30a.m. Dec NY Fed Manufacturing Index. Previous: 27.37.
9:00a.m. Oct Treasury International Capital Flows. $5.8B%.
1:00p.m. Dec NAHB Housing Market Index. Previous: 19.

Tuesday, December 18, 2007
7:45a.m. ICSC Chain Store Sales Index For Dec. 15.
8:30a.m. Nov Housing Starts. Previous: +3.0%.
8:55a.m. Redbook Retail Sales Index For Dec. 15.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, December 19, 2007
10:30a.m. 12/14 Crude Inventories. Previous: -722K

Thursday, December 20, 2007
8:30a.m. Initial Jobless Claims.
8:30a.m. 3Q Final GDP. Previous: +4.9%.
10:00a.m. Nov Conference Board Leading Indicators. Previous: -0.5%.
10:00a.m. DJ-BTMU Business Barometer.
10:00p.m. Dec Philadelphia Fed Business Index. Previous: 8.2.

Friday, December 21, 2007
8:30a.m. Nov Personal Income. Previous: +0.2%.
8:30a.m. Nov Personal Spending. Previous: +0.2%.
10:00a.m. End-Dec Reuters/U Of Mich Sentiment Index.



Key Earnings Announcements This Week:

Monday, Dec. 17:
After: ADBE, QTWW, SEH, EGR,, ASUR
Others: ACIW, CAO, DLPX, EMKR, CLWT, OPTT, PKE, WPCS

Tuesday, Dec. 18:
Before: BKRS, BBY, FDS, GS
After: AIR, APSG, DRI, FSII, HOV, NDSN, PALM, TTWO

Wednesday, Dec. 19:
Before: ATU, KMX, CMC, GIS, JOYG
After: ACN, APOG, HWAY, HEI, MLHR, NKE, ORCL, PAYX, SMOD, SMSC, SCS

Thursday, Dec. 20:
Before: AM, BSC, BRLI, CCL, CTAS, CAG, DFS, FDX, HSOA, MCS, MS, PKE, PIR, PRGS, RAD, SCHL, STEI, SMA, TTEC, WGO, WOR
During: ASFI, PNY
After: COMS, APOL, COGN, CAO, EGLS, JBL, MU, RHT, RIMM, RECN, SHFL, TEK, TIBX, UNCA, PAY

Friday, Dec. 21:
Before: CC, WAG

Note: All economic numbers and earnings reports are in lines with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column. This list is not a complete list of earnings, so always double check your positions!

Fed Fails to Reassure Hesitant Market

Good morning! The market had a rough time on Friday, failing to hold up after it attempted to rebound on Thursday afternoon and again on Friday morning. I had been hoping for a stronger showing on Friday to allow the market to play out this daily correction off last month's lows a bit longer into the end of the year, but things are looking weak heading into the light holiday trading coming up. Friday began with a large downside gap in the indices heading into the opening bell. This took the market directly into support from Thursday afternoon. Stronger-than-average gaps in the indices themselves have a greater propensity for filling than average-sized gaps, which meant that despite the losses, the indices had a bullish bias initially since such gaps usually try to fill within the first half of the day.

Despite the bullish bias, the bulls had a more difficult time actually latching onto that sentiment. There was still a lot of hesitation and the market was quite choppy throughout the first hour of trading. Nevertheless, the indices made their way slowly higher with a great deal of overlap into the 5 minute 20 period simple moving average. When that resistance level hit the market then began to congest, forming a little bull flag as volume dropped into 10:30 ET. At 10:40 ET the market spiked, busting through the resistance and rising quickly to close the morning's gap.



The gap resistance zone hit at the same time as the 11:00 ET reversal period. This corresponded to Wednesday's closing prices in the S&P 500 and Dow Jones Industrial Average and Thursday's highs in the Nasdaq Composite. Having accomplished its goal, momentum slowed in the market at that point and rolled over with increased pace on the downside. An Avalanche pattern emerged in the form of a choppy base into about 11:30 ET, which broke lower into 11:45, providing the first confirmation of a change in the intraday trend. Another low-level base followed into noon, which gave way to further selling into 12:30 ET. This took the S&Ps and Dow back to the opening price zone, which served as a strong support level into the early afternoon.



The market continued to remain weak throughout the rest of the day. The S&Ps and Dow popped for a couple of minutes into 13:00 ET, but failed to hold. As the indices hit the previous breakdown down point from mid-day they held and slid lower into 14:00 ET. Another slow congestion zone formed with very slight upside, breaking strongly to the downside on the 5 and 15 minute time frame into the final hour of trading. The Nasdaq suffered the strongest losses, but all three of the major indices closed within a few ticks of the session's lows.



Friday's session ended with losses across the board. The Dow Jones Industrial Average ($DJI) fell 178.11 points, or 1.3%, and closed at 13,339.8. This added to the earlier losses on the week for a decline of 2.1% for the week as a whole. Two of the top losers were Alcoa Inc. (AA), which fell 3.1%, and Home Depot Inc. (HD), which lost 3.6% by the close. Microsoft Corp. (MSFT) was the Dow's only advancing issue. It only gained 9 cents, however, so it was not exactly a stunning success, although it was at least a survivor!

The S&P 500 ($SPX) and Nasdaq Composite ($COMPX) also failed to hold up on Friday. The S&Ps lost 20.46 points, or 1.4%, and closed at 1,467.95. This was a loss of 2.4% on the week overall. The Nasdaq fell 1.4% as well, which equaled 32.75 points. It closed at 2,635.74 with a 2.6% loss for the week. The Russell 2000, while not shown in the charts here, also closed at the lows of the day on Friday. It had an even worse performance than the Nasdaq, ending lower by 2.02%, or 4.02% on the week.

Given the action over the past week, the chances of seeing the stronger overlap and choppy upside over the next couple of weeks that we have been watching for and had been developing thus far this month has diminished. The odds are higher that we will see continued selling early this week, although we can then easily see the market try to turn back around on Tuesday. We should expect things to start to slow down, however, as the week progresses and holiday trading continues.



FREE ONLINE TRADING CLASSES: Don't forget to join me for this Thursday's free online trading seminar! Adjustments have been made to the login instructions to assist those unable to connect during our first class. For more information and logs to my last session, go to http://www.tradingfrommainstreet.com/TradingClasses.html.

Market Lacks Focus Following Recent Fed Activity

Good morning! The market had quite a bumpy ride on Thursday after the Federal Reserve left it rather confused. On Tuesday it had cut rates by a quarter percent and the market took a beating, disappointed that the half point rate cut many had been hoping for had not materialized. Then the indices had bounced back into the open on Wednesdays on news of intervention from the Fed with plans to increase liquidity, but the promise fell mainly on deaf ears and the market sold off throughout the entire session.

On Thursday there was very little focus. The market was oversold and despite attempts to push lower it was unable to. I had been on the side of an afternoon reversal throughout the day but was starting to lack conviction by the time some buying finally did appear. All in all, it was a tough session and while many traders I know were positive on the day, many also felt themselves rather lucky to be so (although luck often has little to do with it!)



Although the volume in the market was pretty strong on Thursday, the trend was not. The session began with a slight downside gap, which immediately attempted, but failed, to fill. After the first few minutes of trading the bears took over again and brought the indices to new intraday lows. A descending triangle was made over the next hour, leading to a breakdown into the 11:00 ET correction period. This low held the one from Wednesday, keeping in tack the larger range action we have been looking for on the daily time frame.



The indices then began to roll over slightly. The momentum remained a little more on the bearish side as the indices held the lower end of the range over noon, but I backed off on shorts after the reversal lower into the early afternoon since the momentum on the downside over the last couple of days had left the market rather extended intraday and the base at low was not strong enough for a steeper decline. I was convinced that the market would trap people and reverse again into the afternoon, but I succumbed to the lure of lethargy after such a choppy and slow morning and early afternoon and missed the ideal reversal trigger at 14:00 ET. Opps!



Once the 15 minute 20 sma resistance broke, however, the buying was fairly steady. It came in two waves of upside, broken by two waves of corrective action from about 14:20-15:15 ET. Then the buying continued again into the close, taking the indices back to morning highs and even beyond in the case of the S&P 500 and Dow Jones Industrial Average. Both finished slightly positive on the day. The Dow Jones Industrial Average ($DJI) gained 41.1 points to close at 13,518. Honeywell Intl Inc. (HON) was a strong gainer on upbeat earnings targets. It climbed 5% on the day. The S&P 500 ($SPX) rose 1.82 points to close at 1,488.41. The Nasdaq Composite ($COMPX) failed to close in positive territory. It lost 2.65 points and closed at 2,668.49.

Despite the Nasdaq's losses, all three of the indices managed to hold those Wednesday lows we were looking for in order to hold the daily pattern we have been following over the last couple of weeks. This means that it is still in line with forming choppy, overlapping action with slight upside continuing into the end of the year. We do need to see this hold better into Friday, however, so that we continue to see that greater daily overlap back up into Tuesday's highs into early next week.


FUTURES CONTRACT UPDATE: For those trading futures, you should switch to the March '08 contract at this time. The symbol is H. I have used December in the charts above for continuity in price action.

FREE ONLINE TRADING CLASSES: Don't forget to join me for next week's free online trading seminar! For more information, go to http://www.tradingfrommainstreet.com/TradingClasses.html. You can also access last week's class logs at this link!

Fed Attempts to Redeem Itself, but Fails to Encourage Investors

Good morning! The market went from one extreme to the other on Wednesday. The session began with strong gains on a sharp upside gap on news that the Fed had planned to add liquidity to the markets, helped by several foreign banks, including the European Central Bank and the Bank of England. Right away, however, it became obvious that the bulls were not at all convinced that this was enough. Despite the stronger-than-average gap, the indices were soon displaying marked weakness, with very little suggestion that any intermediate support zone would manage to hold.



As the indices headed lower throughout the morning, all attempts to hold modest support zones quickly failed. Upside momentum simply could not surpass that of the sellers, even in the short term. Small support levels from Tuesday afternoon stalled the selling at several points, but buying off each support level was lacking ambition and the momentum remained extremely pessimistic for the bulls. Each gradual move higher culminated in a bear flag and continue selling with the typical two-wave correction pattern holding. This meant that each of the main bear flags experienced two waves of upside within the flag before giving way to further selling.



The strongest decline of the day came shortly after 14:00 ET. The selling began at a normal pace off the 15 minute 20 sma resistance after a lighter volume correction, but a small base at lows for gave way to a very steep downside move into 15:00 ET. This move flushed the market into those lower lows I mentioned yesterday. The intraday reversal was rather late in coming, however, and it was only in the final 45 minutes of the session that it whipped back. This created the hammer candlestick pattern I mentioned, but just barely! It definitely wasn't looking too likely heading into the last hour of the day! The reversal was so quick that I missed it myself, but the market did make back a large chunk of the intraday losses.



At the end of the day the Dow Jones Industrial Average closed lower by 41.13 points. It had been up 271 out of the open. Citigroup (C) was one of the largest Dow losers, falling 5.3% on the session, while AT&T (T) rallied another 5.7%. The S&P 500 ($SPX) and Nasdaq Composite ($COMPX) both still managed to close in positive territory. The S&P 500 rose 8.94 points and closed at 1,486.59, while the Nasdaq rose 18.79 points and closed at 2,671.14. So far this action still lends itself to our scenario of greater overlap and choppy, slow upside this month from this point onward. What we need to see at the point is for the lows on Wednesday to not give way to another strong selloff. I don't think this is likely though quite yet.

25 Basis Point Rate Cut Disappoints Market Participants

Good morning! The price retracement we've been watching for hit full force on the heels of Tuesday's disappointing 25 basis point rate cut by the Federal Reserve. There had been a lot of debate as to whether the rate cut would fall at a quarter or a half percent, with a quarter percent as a given. Although I think we would have still fallen on a half percent, the drop was much more substantial with the lower end of the expected cut.

The Dow Jones Industrial Average ($DJI) had lost 294.3 points, or 2.1%, and closed at 13,432.8 on Tuesday. The S&P 500 ($SPX) lost 38.31 points, or 2.5%, and closed at 1,477.65. The Nasdaq Composite ($COMPX) dropped 66.60 points, or 2.4% and closed at 2,652.35. American Express (AXP) was one of the biggest losers in the Dow, falling 5.2%. Two of the Dow 30 managed to close higher despite the sky dive action in the rest of the index. They were AT&T (T), which gained 4.1% on the announcement of a 13% dividend hike and share buyback and McDonald's (MCD), which has been making steady gains since its 2003 lows.



The session did not begin with a strong show of concern from the bulls. In fact, the market was up ahead of the Fed. The day had begun with a slight upside gap, a trading range for the first 45 minute or so, and a slow decline into the 11:00 ET reversal period. When that reversal period hit, the market was testing strong support with previous lows in the S&P 500 and the 15 minute 20 simple moving average in the Nasdaq Composite. While it began slowly, the market corrected off this support and a mid-day base up off the lows broke higher around 12:30 ET. The buying continued steadily until the 14:15 ET Fed announcement. We have been seeing more of this pre-announcement type of move lately, but the volume was pretty light throughout the day up until that point. This actually helped the market break down since it indicated that the bulls were not very confident.



After such a rapid freefall following the news, the market had a very difficult time correcting at all off support zones. A series of small bear flags followed the initial counter-move into 14:30 ET. The momentum slowed after the first drop, but then remained steady right into the closing bell. The session ended almost to the tick of Thursday's lows. While not noticeable on these charts, this support held in the immediate post-market action where the index futures bounced back up a bit in reaction to the support and intraday exhaustion.



The market tends to have a difficult time keeping up the pace after a day such as Tuesday, but we can still see some slightly lower lows. I will be taking things slow, however, since hammer and doji candlestick patterns, whereby the market moves lower and then back up to close near the opening price, is fairly common. Chances are that I'll be focusing mainly on reversal patterns intraday. This action is also typical of the onset of a larger price decline on a daily time frame, which would break with the choppier back and forth upside ahead of the fall that I'd been expecting that would have had a better chance with a 50 basis point cut. I am not yet ruling it out, however, and instead will wait to see how the next several days play out. If the market can hold Wednesday's lows into Thursday, then that scenario is still going to be valid.

Market Stalls Ahead of Fed

Good morning! Volume was very light on Monday as the market geared up for Tuesday's highly anticipated FOMC meeting. The market was stronger than I was expecting heading into the weekend, but the buying did not last long. Some choppy action out of the open on a small upside gap was followed by a strong move higher out of the 9:45 am ET reversal period in the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX). The Nasdaq Composite ($COMPX) didn't quite play along. It popped into 10:00 am ET on pending home sales data, which was a strong accelerant for the buyers. The data came in with a second straight month of increases. The Nasdaq then chopped around into 10:30 am ET even though the Dow and S&Ps kept climbing. Upside momentum shifted to the Nasdaq, while the slowdown in buying in the Dow and S&Ps created a reversal pattern off highs into the 11:00 am ET pattern.



The market did a decent job of holding the zone of the morning highs throughout the rest of the day. There were some slightly higher highs in the Dow and S&Ps, but this breakout attempt from the mid-day range merely served as a trap. Volume failed to confirm the attempt and a 2 minute Avalanche pattern formed after the steep retracement off the afternoon highs. The market then broke lower into 14:00 pm ET.

The Nasdaq fell all the way back into the morning congestion before it found support at the 14:00 ET reversal period. The Dow and S&Ps found some closer support at the 12:00 ET lows. The momentum rolled over somewhat at that point, but not enough to take the indices out of the day's trading range. The market pulled back into the middle of the range, but failed to make any significant move ahead of the closing bell.



The Dow posted gains of 101.5 points on Monday, up 0.7%, and closed at 13,727.0. The S&P 500 rose 11.30 points, or 0.8%, and ended the session at 1,515.96. The Nasdaq Composite, which was the weakest of the three, climbed 12.79 points, or 0.5%. It finished the session at 2,718.95. Top Dow gainers included Caterpillar Inc. (CAT)(+3.2%), J.P. Morgan Chase (JPM)(+2.9%), McDonald's Corp. (MCD)(+2.9%). AT&T (T), on the other hand, lagged considerably. It fell 1.5%. In other markets, crude oil also posted losses, dropping 42 cents to $87.86/barrel. Meanwhile, gold futures climbed $13.3 to close at $813.5/ounce.



With the Fed looming, I am expecting some corrective action off the recent highs. The market typically pulls higher the morning of the Fed and then volume dies off over noon. The least risky action on a Fed day is usually in the first 90 minutes of the session. There can be some decent moves mid-day, but it is more common to see very little activity just prior to the announcement. When the news hits we then tend to see three strong moves in reaction to the news. First the trio appears on a 1 minute time frame and then repeats on a larger one, typically the 5 minute time frame. It is very dangerous to trade in the immediate aftermath of the Fed announcement due to the rapid data stream. Proceed with caution at that time! A rate cut is anticipated, but there is great deal of debate as to whether it will be by a quarter or a half percent.

Market Likely to Chop Around Ahead of FOMC Announcement

Good morning! As expected, the market headed a bit higher on Friday, but the momentum slowed significantly after the strong upside from Wednesday and Thursday. The overall result was a much choppier market as volume continued to decline into the weekend.

Ahead of the open, the Labor Department reported the addition of 94,000 nonfarm payroll jobs in November, while the unemployment rate held steady at 4.7%, slightly under expectations of an increase to 4.8%. In other economic news released later in the session, the University of Michigan reported that consumer sentiment has continued to drop into December, falling to 74.5 from 76.1 last month. This is the second lowest reading since 1992. In the afternoon the Federal Reserve reported that consumer credit rose by 2.3% to $7.7 billion in Oct. on increased credit card debt.

After opening near Thursday's close, the session began on Friday with a trading range. It narrowed as the morning progressed, creating a symmetrical triangle on the 5 minute time frame. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) broke lower out of 10:15 am ET and continued into the 10:45 ET correction period. The selling had been slow and it didn't take much to turn it around. The Nasdaq had remained in its own triangle intraday up until that point, but it broke higher into 11:00 am ET with the S&Ps and Dow.



The market was stronger on the upside, popping into the 5 minute 20 period simple moving average in both the S&P 500 and Dow, while the Nasdaq moved back up nto its opening prices. A small congestion followed as volume declined, creating a bullish pattern into 11:30 am ET. The breakout from this range was one of the strongest moves of the entire session. It took the S&P 500 back to its open, the Dow to its morning highs, and the Nasdaq to slightly higher intraday highs. These resistance zones held at about 11:45 am ET and the market pulled back into the early afternoon for the second time on the 15 minute time frame intraday.



The momentum on the mid-day correction varied from one index to the next. The Nasdaq got off to the most rapid start, but all three indices formed descending triangles. The more narrow range of the S&Ps, however, led to strongest drop in that index around 13:00 pm ET. Both the S&Ps and Dow were able to retest the morning lows on this early afternoon descent, but the Nasdaq only came back into the middle of the morning's range before the downtrend channel on the 5 minute time frame broke higher mid-afternoon.

The market pushed higher with strong upward surges in buying on the 5 minute time frame. The corrections off each high, however, were also rather steep and gained in momentum with each correction even though the rallies were also gaining in momentum. In order to really judge the overall momentum of this afternoon buying, it was necessary to transect the entire upside from about 13:30 to 15:15 ET. The revelation was a slower overall ascent than mid-day. Since most trends form with two or three waves, the third wave of upside into 15:15 ET which took the indices back into upside resistance was the final one of the afternoon, leading to another correction off the highs going into the closing bell.



The Dow gained 5.7 points on Friday, closing at 13,625.6. This was a 1.9% gain on the week. The S&P 500 lost 2.68 points, finishing the session at 1,504.66, or a 1.6% gain on the week. The Nasdaq Composite also fell slightly on the session as a whole after new highs on the week. It shed 2.87 points and closed at 2,706.16. This was a weekly gain of 1.7%.

Although the market as a whole didn't get very far on Friday, there were still some rather significant gainers and losers on the day. These included Macrovision Corp. (MVSN), which fell 5.55 points, or 21.3%, after announcing its plans to buy Gemstar-TV Guide Intl. (GMST). GMST fell nearly a point, losing 16.6%. Palm Inc. (PALM) also had a rough session, losing 0.85, or 12.9%, after Thursday's afternoon announcement of net losses for this last quarter. American Express Co. (AXP) was another top loser, falling 2.57 points, or 4.3% following a downgrade by Merrill Lynch. Amgen Inc. (AMGN) lost 3.05, or 5.5% on news of discussions regarding its drug Aranesp with the Food and Drug Administration. News was released on Saturday stating that its Romiplostim study met its goals, so this is something to watch again on Monday for more volatility.

On the winning side of the market were names such as Freeport-McMoran Copper & Gold (FCX), Penney JC Inc (JCP), Bear Stearns (BSC), Suntech Power Holdings Co (STP), United States Stl Corp. (X), Apple Inc. (AAPL), Imax Corp. (IMAX), First Solar Inc. (FSLR), Synopsys Inc. (SNPS), and JA Solar Holdings Co Ltd. (JASO).

The main news event of this upcoming week is going to be Thursday's FOMC meeting. A rate cut is highly anticipated, but I suspect that we are going to primarily experience a trading range this week with a great deal of overlap from one day to the next over the next couple of days unless the Fed does something completely unexpected. This should make intraday pivots and reversals favorable setups for trading.

Positive News for Borrowers Bolsters Buying

Good morning! The upside we were looking for on Thursday materialized early on in the session. Although the market opened relatively unchanged from the prior day's close, the indices immediately began to slowly climb higher. This first wave of buying was merely an extension of the move into the previous day's close, but it took the market to new highs on the month. The pace slowed and the market pulled back off the 10:15 ET reversal period, but the 5 minute 20 period simple moving averages held in the Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 and the gradual ascent resumed.



The Nasdaq experienced the greatest degree of correction into mid-morning, making it more difficult to break through the morning highs as it rose intraday. It came back into the zone of those highs at the 13:00 ET correction period when the other indices were steadily making higher highs. This resistance held and a two-wave correction off the highs followed, leading to a downward move into the 14:00 ET correction period. The volume on the selling was weak, indicating a lack to motivated sellers, so the 15 minute 20 sma held very well and the strongest move of the session kicked off coming out of this time and price support. Although the momentum slowed into the final hour once again, the rally continued into the closing bell.



The Dow ($DJI) rose 174.9 points, or 1.3%, on Thursday, closing at 13,619.9. 27 of its 30 components posted gains. American Insurance Group Inc. (AIG) was one of the top performers, rising 3.2%, or 5.5% per share. The S&P 500 ($SPX) rose 22.33 points on the session, or 1.5%. It closed at 1,507.34. The Nasdaq Composite ($COMPX) rose 42.67 points, or 16.1%. It ended the session at 2,709.03.

A strong incentive for the bulls was the afternoon announcement by President Bush and other key officials in administration regarding the development of strategies to provide aid for the struggling subprime borrowers. The plan involves freezing interest rates for as long as five years, but does not include any government funds. Loans entered foreclosures during the third quarter were reported to be at record highs. The rate of loans at some point within the foreclosure process hit 1.68%, up 0.28% from the previous quarter.



Despite the buying, the volume in the indices continued to drop on Thursday. I am still looking for a bit more upside into Friday though. This will be the third day of the rally and after 2.5-3 days of upside, whereby the 15 minute 20 simple moving average holds, the market has a tendency to pull back further to break that moving average support into the afternoon or next day following such a move. This would mean another correction heading into early next week off Friday's highs.

Key Earnings Announcements Dec 10-14

Monday, Dec. 10:
Before: IPSU,MTN
After: DMND, FCEL, HRB, NCS, SAI

Tuesday, Dec. 11:
Before: BKRS, KR, MGAM
After: ABM, COO, TUTR, VSTA

Wednesday, Dec. 12:
After: ADCT, CKR, CPII, MATK, NOVL

Thursday, Dec. 13:
Before: AHCI, CIEN, COST, HSOA, JOSB, LEH, MESA, SMA, TTEC, WGO, ZOLT
During: ASFI, PNY
After: CAO, LEAP, ZQK, RSTO, RVI, UNCA, PAY

Friday, Dec. 14:
Before: RTK

Note: All economic numbers and earnings reports are in lines with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column. This list is not a complete list of earnings, so always double check your positions!

Economic Reports and Events - Dec 10-14

Monday, December 10, 2007
There are no economic indicators scheduled today. 1

Tuesday, December 11, 2007
7:45a.m. ICSC-UBS Chain Store Sales For Dec. 8. .
8:55a.m. Redbook Retail Sales Index For Dec. 8.
10:00a.m. Oct Wholesale Trade. Previous: +0.8%.
5:00p.m. ABC/Wash Post Consumer Conf For Dec. 9.

Wednesday, December 12, 2007
8:30a.m. Oct Trade Balance. Previous: -$56.45B.
8:30a.m. Nov Import Prices. Previous: +1.8%.

Thursday, December 13, 2007
8:30a.m. Initial Jobless Claims For Dec 8 Week.
8:30a.m. Nov Producer Price Index. Previous: +0.1%.
8:30a.m. Nov PPI, Ex-Food & Energy. Previous: Unch.
8:30a.m. Nov Retail & Food Sales. Previous: +0.2%.
8:30a.m. Nov Retail & Food Sales, Ex-Autos. Previous: +0.2%.
10:00a.m. Oct Business Inventories. Previous: +0.4%.
10:00a.m. DJ-BTMU Business Barometer For Nov 24.

Friday, December 14, 2007
8:30a.m. Nov Consumer Price Index. Previous: +0.3%.
8:30a.m. Nov CPI, Ex-Food & Energy. Previous: +0.2%.
9:15a.m. Nov Industrial Production. Previous: -0.5%.
9:15a.m. Nov Producer Price Index. Previous: 82%.

Class Logs - Understanding Price Support and Resistance

Hey gang,

Here is the link for today's class!

http://www.tradingfrommainstreet.com/classes/Class_SRPart1.html

All my best,
Toni

Toni's View for 2008

Hi Toni,
in your last video you said, the market might go down the first part of 2008.
How do you come to that conclusion? That is what I would like to know, and learn.


Dear Sir,

Yes, this is what I am currently looking for as probable given the current market development. I would suggest to start with the first video listed at the bottom on the left side of the video page beginning on Oct. 21. I think that this will answer your question because I go over the price action as it has developed heading into that time and progressing from that point onward. The link is http://www.tonihansen.com/marketactionvideo/

All my best,
Toni

Q&A Part II

Q)

How do you select and organize from so many symbols and timeframes to monitor so many possible positions and then ultimately pull the trigger?

How does it differ for scalps vs. swings?

How do you narrow down the world of stocks and other assets to a set that you want to monitor, from month to month, week to week, day to day, and hour to hour?

A)

It really depends upon what time frame I am monitoring for setups on. For instance, if I am looking for position trades I first begin with a lot of purely manual scanning. TeleCharts is a great program for this. I just use basic volume and price scans to eliminate securities which are not active enough or are too cheap or too expensive to be of interest. I prefer stocks over $15, especially for short, where over $30 tends to be best, but will sometimes go down to $7 if it is a long. I want it to trade 300k average daily volume over the past 30 days. Once I have a list, I try to narrow that down to about 20 stocks and then will post them in a market minder on my charting platform and set alerts at key price support or resistance levels on my favorites and then just monitor the others around mid-week and again on the weekend. I repeat this for swingtrades, but will often check though a few times throughout the day for intraday pattern development.

On daytrades I have a bit different approach. I use scans for top percentage and price gainers and losers, as well as gaps going into the open and then narrow those down to about 5-8 stocks to keep an eye on throughout the day, usually only about 2-3 to watch into the open. I then scan through these all day and add new stocks to my market minder as I go back and keep scanning the larger gainers and losers lists to add to my list. I then keep flipping through my list and alternate watching it with scanning for other potential setups. On stocks which are nearing trigger prices I will put up a small chart to watch the pattern development so that I can catch it quickly as it gets going. I don't use alarms as much for intraday setups, since once a channel breaks it means I missed the best entry, but there are always exceptions.

Q&A

The following questions were sent to me via email and are sent by others on a regular basis, so I wanted to take a minute to share:


Q) Can your method work on 1 contract? (EMinis)

A) I trade a lot of different markets and time frames. The strategies I used in futures are based upon the same building blocks that I use when trading equities. They work well with one contract, although ideally I would recommend two in order to adjust position size at different support or resistance levels. I would start with the NQ when trading intraday or practice on the ES afterhours when the market can be a lot slower.

Q) How is the trade entered? Is it based on price action entry with the break of a bar or is the entry based on certain support and resistance levels?

A) I use a combination of entry triggers. Often in futures I will use more entries based upon support or resistance levels, but can use tight a very small time frame channel break to confirm the reversal.

Q) In terms of stop placement, is it an absolute amount or it varies trade from trade depending on the pattern.

A) For stop placement, I rely purely on support or resistance level breaks and not absolute price amounts, so it does vary from trade to trade. I would suggest taking setups where the stop amounts will be approximately the same, however, until you can built up to larger risk and are able to adjust contract size accordingly to keep stop amounts more comparable.

Market Busts Through Daily Resistance on Positive Data

Good morning! I was rather off the mark heading into Wednesday's session. After the close near the day's lows on congestion the day before, I had expected further downside into the next morning before we would see it turn higher. Looking back at the trend action, however, past development with this type of reversal off lows has it moving higher for a couple of days even without a much larger correction off the first highs of the reversal (from 4 days ago).

It was necessary to switch gears right away into the open due to strong premarket buying. The market had crept higher in afterhours and premarket trading, but then around 3:30 am ET they stalled and congested along the highs until the 8:30 am ET economic data. At that point the range broke sharply higher. The government had revised unit labor costs downward, reporting a 2% annual decline in labor cost as compared to the 0.2% drop estimated in November. This indicates a decline in inflationary pressure and happy news for the bulls to latch onto. Additionally, the Labor Department said that productivity in the nonfarm business sector rose at a 6.3% annual rate, which was 4.9% higher than estimates were reported at.



Wednesday's upside gap was a form of a breakaway gap. This meant that it was a gap out of the pullback from the past couple of sessions, so the gap would have a more difficult time attempting to fill. This immediately led to a change in my intraday bias away from the bearish side. Not much happened shortly after the open, although the indices did hold up quite well. They waited around for the 10:00 ET data to hit. At that point the Commerce Department reported that orders for U.S.-made factory goods rose 0.5% in October. This marks the largest gain in three months. The Institute for Supply Management also stated at this time that its nonmanufacturing index declined to 54.1% in November off a 55.8% level the previous month. This was a larger than expected move. The direct response to the data was a rapid spike in prices, although they reverted to pre-data levels intraday at 10:30 ET before again resuming the upside at a strong pace.



The mid-day market move, following a strong gap and early morning chop, created the perfect conditions for the market and a number of individual stocks to roll over around noon. Blyth Inc. (BTH) and Paccar Inc. (PCAR) were two excellent examples which caught my eye, where the early morning strength wavered and lead to a nice mid-day pullback. The market overall pulled back with two decent waves of selling on the 15 minute time frame into the mid-afternoon. Typical corrective moves within a larger trend then have a habit of turning back around. Since the daily now favored more upside, the intraday and daily time frames worked together to lead to a move upwards out of the 15:00 ET correction period and then through the intraday highs after a brief base into afterhours trading.



Although the buying continued for much more substantial gains afterhours, the Dow still climbed 196.2 points (1.5%) intraday to close at 13,445. 29 of the 30 Dow components posted gains. The S&P 500 rose 22.22 points (1.5%) and closed at 1,485.01. The Nasdaq Composite had the strongest move thanks to morning upside. It gained 46.53 points (1.8%) and closed at 2,666.36.

Intel Corp. (INTC) was one of the strongest of the well-known names on Friday, advancing 3.5% following an upgrade. American International Group Inc. (AIG) also posted strong gains. It rose 4.9% with reassurance by its CEO in response to subprime mortgage concerns. As I mentioned earlier, I am anticipating the buying to continue for about two more days. I do, however, expect the overall momentum to be much less than earlier last week and possibly with greater overlap from one day to the next as well. Keep an eye on the 5 minute chart of the S&P 500 from the afternoon of the 29th for a comparable pattern development to the one occurring at the point on the daily time frame.

Toni's Online Trading and Investing Class Schedule - FREE

Toni's Online Trading and Investing Class Schedule

Good day!

A few weeks ago I sent out an email to announce that I would begin holding classes on online trading and investing in my online trading room. Beginning in December, classes will be held on the first and third Thursday of each month at 4:15 ET. The first class will be held on Thursday, December 6th, 2007 at 4:15 ET. Each class will last for an hour. The chatroom is text only, so you can easily save the log for future reference.

I will kick off my class series with a two month study of support and resistance. Support and resistance levels are key areas of price development where directional move in a security is likely to react, either by stalling for awhile, reversing, or even breaking out. In this series I will explore some of the most influential forms of support and resistance, delving into how to weigh one level against another for a better understanding of which levels will lead to the greatest reactions in terms of price. It is quite simple to look at a chart after the fact and say, "Yes! That is why XYZ stalled at that level or reversed at that price." How to do so in advance is quite another issue altogether. My goal is to help you improve your own abilities so that you may apply that knowledge to FUTURE price moves.

December 6, 2007 4:15 ET
Utilizing Support and Resistance Levels - Part 1
Applying basic price levels to identify support and resistance levels.

December 20, 2007 4:15 ET
Utilizing Support and Resistance Levels - Part 2
Applying trend lines and channel analysis to identify support and resistance levels.

January 3, 2007 4:15 ET
Utilizing Support and Resistance Levels - Part 3
Applying moving averages for identifying support and resistance levels.

January 17, 2007 4:15 ET
Utilizing Support and Resistance Levels - Part 4
Applying Fibonacci levels to identify support and resistance levels (focus on EMini trading).


Accessing the online class:

There are two popular ways to access my online trading room. They are listed below:

IceChat:

This is a free IRC chat platform.

1) Go to icechat.net
2) Go to downloads on right side menu
3) Install IceChat 7
4) When IceChat is loaded and pops up on right side then click favorite servers. At the bottom click "add new" then add "othernet.org"
5) Once connected to server, then on right side bottom click "favorite channels". On the bottom click "add". Then add "#mainstreet". Then click "join".

It takes a couple of minutes for the chat room to come up after you join, but then you should see in dialog box welcome and info. During this process you will be prompted to give screen name and sign off message, so input what you would like to appear.

mIRC:

mIRC is an IRC chat platform which is free for 30 days, but then requires a one-time registration fee. You can access the room via mIRC by following the instructions at http://www.tradingfrommainstreet.com/roomsetup.html

To help support my site and future classes, please check out my in depth online trading course at http://www.swingtrader.net with about 10 hours of audio/video instruction and over 400 pages of text. Also don't forget to drop by my Trader's Library affiliate bookstore, where you can find many of today's most popular titles at prices that even beat Amazon's prices at http://www.invest-store.com/tradingfrommainstreet/ as well as weekly specials.


Thanks and I'll see you in class!

All my best,
Toni Hansen
thansen@tonihansen.com

My websites:
http://www.tonihansen.com/
http://www.tradingfrommainstreet.com/
http://www.swingtrader.net/

Market Congests on Downside Bias

Good morning! Heading into Tuesday we were looking for a downtrend day in the market. I had hoped for a little upside in the morning to allow for a stronger trend, but unfortunately the market actually gapped a good deal lower into the open instead. This took out a lot of the downside potential it had heading into the session. The gap brought the Nasdaq Composite ($COMPX) back into what had been price resistance just over a week ago on November 26th. Since it had broken higher last Wednesday, however, this resistance level became a very strong support level. It also was the zone of Wednesday's lows

The size of the gap, coupled with the larger support on the daily charts, led the market to hold the gap prices to begin with and it turned higher throughout a large portion of the morning. Resistance hit after three waves of buying on the 5 minute time frame as the indices closed their gap zones and came into resistance at the 15 minute 20 simple period moving average zone. The volume had declined somewhat on the upside move, particularly the last segment of it, but it was not enough to create strong selling pressure. The 5 minute 20 sma zone held and the indices returned for a second test of the morning highs before again trying to pull lower into noon.



While the pullback off highs did take place on a larger scale this second time around on the 5 minute time frame, the momentum was still insignificant compared to the rally and the pullback into noon literally held the "noon", or 12:00 ET, lows as that correction period hit. Another ascent on the 15 minute followed, taking the market higher in what had now become a 15 minute trading range. The pace of this buying was much weaker in the Nasdaq than on the initial move off the morning lows and this rounding off at the intraday highs created more of a bearish bias in that index into the second half of the session.



The momentum in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) did not slow on their second upside moves of the day on the 15 minute time frame. Instead they were nearly identical. This allowed for equal move resistance to hold as their gap zones closed more securely into the 13:00 ET correction period. As that strong afternoon correction zone hit, not only did the S&Ps and Dow pull lower once more, but the Nasdaq broke its gradual upside trend channel to trigger a solid short pattern on the 5 minute time frame, taking it back to the noon lows over the course of the following half hour.



The 13:30 ET area held as support hit and all three indices formed 5 minute Avalanche setups into the 14:00 ET correction period. This took the S&Ps and Dow back to their own prior lows from noon. The momentum on the selling was not strong enough to create a great continuation pattern lower into the close, but the third upside move of the day on the 15 minute time frame was more gradual than the previous selloff and earlier channel break levels on the 5 minute time frame served as resistance into 15:00 ET. This resistance led to a third 15 minute breakdown into the close, resulting in a 65.84 point loss in the Dow, a 9.63 point loss in the S&Ps, and a 17.30 point drop in the Nasdaq. The Dow closed at 13,248, while the S&Ps closed at 1,462, and the Nasdaq ended the session at 2,619. I am expecting the congestion from Tuesday to break lower into Wednesday. The base on the 60 minute time frame is very favorable for such a move into about 1450 in the S&P 500 ($SPX).

Market Correction Continues Off Daily Resistance

Good morning! Choppy trading from Friday afternoon continued into Monday morning as the market continued to hold the daily resistance from mid-October. The market had moved very slightly lower into the open with the S&P 500 and Dow Jones Industrial Average showing weakness over the Nasdaq Composite. At the 9:45 ET correction period the indices pulled something higher off support on slowing momentum and declining volume, setting the market up for a breakdown when the 10:00 ET ISM Manufacturing Index data came out. Business activity dropped to 50.8 in November, down 0.1 from October. This very narrowly indicates expansion, whereas a number under 50 would show contraction. The immediate response to the data was a sharp downside trust, but once the initial reaction waned the buyers returned into 10:15 ET.

The upside throughout the remainder of the morning began quickly in the S&Ps and Dow, but was much more choppy in the Nasdaq Composite. When the 10:45 ET correction period hit the buying slowed and although the indices continued to test highs into the early afternoon they were unable to build momentum. Each high was less significant than the prior, creating rounded highs and a momentum reversal pattern which triggered just prior to 13:00 ET. Notice that in addition, the volume declined as the market made its way higher over noon. This meant that while the indices were moving upwards, there was no conviction in the move. This made it easy for the market to drop very quickly once that uptrend channel from the morning broke lower.



The target on the early morning breakdown pattern from the momentum reversal was the morning lows. It took a couple of waves of selling to get there, first into about 13:00 ET and then a second wave beginning at about 13:30 ET and into nearly 14:00 ET. The afternoon decline slowed in momentum as it came into the morning target zone in the S&Ps and Dow, but still hit the level almost perfectly. The market was already turning over off this support when the 14:00 ET correction period finally came around. The 5 minute 20 sma held as resistance, however, and the market retested the lows into 14:30 ET, making slightly lower lows in the Nasdaq and Dow.

The third test came soon after 15:00 ET. This could have created another reversal into the end of the day if the third drop had been more gradual into the lower low than the previous two moves, but instead it flushed quickly. Even though it bounced back, it could not break the range highs since 14:00 ET and the indices closed near the day's lows.



The day ended on Monday with a 57.1 point loss in the Dow, leading to a close at 13,314.6. An 8.72 point decline in the S&P 500 left it closing at 1,472.42. The Nasdaq Composite lost 23.83 points. It ended the regular trading day at 2,637.13. The overall volume had continued to decline since early in the previous week. This is very typical of congestion zone trading and can make it more difficult to sustain intraday moves, which is why the only decent move on the 15 minute time frame lasted only about an hour out of the entire session.

There were not a lot of well-known stocks trending strongly higher on Monday. One the best was the trend in Hess Corp. (HES), which rose steadily throughout the session. VMEare Inc. (VMW) also had another nice session with a decent mid-day breakout as opposed to the steady move of HES. Another similar breakout took place in Solarfun Power Holdings (SOLF) and this was even more powerful than the move in VMW and has been a favorite of daytraders recently due to the cheap price and wider intraday range. Most of the top gainers, however, established highs earlier in the session and then failed to continue to trend into the afternoon.



The market goes not have a strong intraday trend bias into Tuesday. We can easily see a bit of a pop in the morning and then further and stronger downside into the afternoon. This is because the indices have been rounding off at resistance over the last couple of days and the higher high on Friday will make it more difficult for the market to easily break that resistance zone. This is in line with our expectations for a choppier market as the month progresses since ti would create overlap on the daily. Any retracement more than 50% of the rally off the lows on the 26th will then make it even more difficult for the market to rally quickly back into the previous weekly highs, although it can still trend slowly into that level should that larger correction off this resistance take place.

TONI'S MARKET OUTLOOK VIDEO OF THE WEEK

TONI'S MARKET OUTLOOK VIDEO OF THE WEEK

Good morning!!! Check out my new audio/video look at the market, focusing on several aspects of the current market's development and upcoming expectations based upon the market's current action. You can view each Monday's video HERE: http://www.tonihansen.com/marketactionvideo.

I hope that you enjoy it!!!!

All my best,
Toni Hansen


* New video posted every Monday morning except holidays and while Toni is on vacation.