Mini-Vacation (Kids on Spring Break)

Dear Reader:

My kids are on spring break this week, so I will be taking a "half vacation" and will be suspending my daily market action column for the next 4 days (for Tues-Fri.), but will be back once again next Monday! If you have any questions or anything in the meantime, please feel free to contact me through my website: http://www.tonihansen.com.

If you haven't had a chance yet, you can check out my new three-part series on Fibonacci at Trading Markets.

The links are as follows:

Part 1: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-75282.cfm
Part 2: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-75657.cfm
Part 3: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-75988.cfm

Have a wonderful trading week!

All my best,
Toni

Market Pulls Lower, but Daily Remains Bullish

Good day! The market ran hard into the upside from the 17th into the 24th, but unfortunately this momentum surge left it without enough fuel to continue the move as the week progressed. The indices needed time to correct, but they brushed off all traces of negative news, holding onto a significant portion of the larger time frame rally heading into Friday morning.

Trade was very choppy from Tuesday onward, making it difficult to locate a lot of sustained intraday momentum, even in individual equities. Sure, a few names stood out, like Apollo's (APOL), which experienced a strong mid-day breakdown on Thursday that really fell apart into Friday, but for the most part it had been a scalpers market. This remained the case throughout the first half of the day on Friday as well. As the session wore on, however, this began to change.

The personal income and consumer spending data was released ahead of the open on Friday. In February, income rose 0.5%. Meanwhile, the Commerce Department announced that real consumer spending has risen less than 0.1% since November. Consumer prices rose 0.1% in February, as did core consumer prices which exclude food and energy costs. Over the past year consumer prices are up 3.4%, while core consumer prices are up 2%. This combination has led to an increase in the growth of personal savings. This trend is expected to continue due to continued fear about the economy. The impact of this information on the market as a whole, however, was nominal.

As I mentioned Thursday, I was expecting more upside to continue an afterhours rally heading into Friday morning. The market must have felt obliged to follow through at least to some degree, because it opened with a decent gap higher. A gradual pullback off the open created a continuation pattern on the upside and the indices moved to new intraday highs into 10:00 ET.

The Michigan consumer sentiment index came out a few minutes early, showing a decline from 70.8 in February to 69.5 in March. It had been expected to decline to between 69.6 and 70. This is viewed as confirmation of a recession. Despite the appearance of unfavorable news, the market still managed to rally. It was the last rally of such a magnitude throughout the remainder of the session. The market turned over shortly after 10:00 ET and remained in a downtrend into the closing bell.

After turning off highs, the indices pulled back into the lower end of the day's range. A very gradual correction off the price support created a large two-wave continuation pattern for a selloff into the afternoon. The 15 minute 20 period sma served as resistance and the 12:00 ET correction period helped kick off the breakdown. Once the support gave way, the 5 minute 20 sma held as resistance for the entire afternoon as a series of small 5 minute bear flags took the market continuously lower into the end of the day.

The market did manage to bounce somewhat into afterhours trading, but the Dow still posted a loss of 86.06 points, or 0.7% on Friday. It closed at 12,216. The S&P 500 lost 10.54 points, or 0.8%. It closed at 1,315. The Nasdaq Composite shed 19.65 points, or 0.9%. It ended the day at 2,261. As the market wraps up the first quarter of 2008, the Dow is down 7.9% on the year, while the S&P 500 has lost 10.4%, and the Nasdaq Composite has dropped 14.7%. Earnings season for the first quarter begins in about a week when Alcoa (AA) reports on April 7th. I am looking for a bit of upside in the market into Monday morning, but the increase in the downside into Friday afternoon was a bit of a disappointment and will most likely draw out the daily correction longer on a daily time frame.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic Reports and Earnings This Week

Economic Reports and Events This Week

Monday, March 31, 2008
9:45a.m. Mar Chicago PMI. Expected: 46.3. Previous: 44.5.
10:30a.m. Mar Dallas Fed Mfg Production Index. Previous: 7.1.

Tuesday, April 1, 2008
7:45a.m. ICSC Chain Store Sales Index For Mar 29. Previous: -0.4%.
8:55a.m. Redbook Retail Sales Index For Mar 29. Previous: +1.8%.
10:00a.m. Feb Construction Spending. Expected: -1.0%. Previous: -1.7%.
10:00a.m. Mar ISM Manufacturing Business Index. Previous: 48.3.
5:00p.m. ABC/Wash Post Consumer Conf For Mar 30. Previous: -31.

Wednesday, April 2, 2008
7:00a.m. MBA Mortgage Refinancing Index. Previous: +82.2%.
8:15a.m. ADP/Macroeconomic Private Payrolls Forecast. Previous: -23K.
10:00a.m. Feb Factory Orders. Expected: -0.8%. Previous: -2.5%.

Thursday, April 3, 2008
8:30a.m. Initial Jobless Claims For Mar 29 Week. Expected: +2K. Previous: -9K.
10:00a.m. Mar ISM Non-Manufacturing Composite Index. Expected: 49. Previous: 49.3.
10:00a.m. DJ-BTMU Business Barometer For Mar 15. Previous: Unch.
12:00p.m. Feb Chicago Fed Midwest Mfg Index. Previous: -0.1%.

Friday, April 4, 2008
8:30a.m. Mar Nonfarm Payrolls. Expected: -60K. Previous: -63K.
8:30a.m. Mar Unemployment Rate. Expected: 5%. Previous: 4.8%.


Key Earnings Announcements This Week:

Monday, March 31, 2008
Before: JRT, PEIX, RDNT, SGR
After: GIII, FUL, RMG, UBET

Tuesday, April 1, 2008
Before: GTOP, MNTG, QXM, SGK
After: EXFO, BLUD

Wednesday, April 2, 2008
Before: BBY, KMX, LULU, MON, UNF
After: ANGO, CHNL, LNDC, MU, RUMM, RT

Thursday, April 3, 2008
Before: AYI, CHINA, STZ, CAO, IART, MTRX, RSTO, RPM, WCG
After: CAE, CREL, LWSN, MRGE, NINE, RVI, PAY

Friday, April 4, 2008
Before: SHLM, AZZ, BTH, FDO, MOS

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!

Market Pulls Lower, but Daily Remains Bullish

Good day! The market was still choppy on Thursday, but intraday it experienced some very strong swings on the 15 minute time frames to offer some decent intraday moves in the indices. The day began on Thursday with the downside into the morning that I mentioned in yesterday's column. The Dow Jones Industrial Average and S&P 500 had gapped higher into the open, but they held those opening highs and fell into congestion. The Nasdaq Composite had gapped lower thanks to weakness in technology due in large part to disappointing numbers from Oracle (ORCL) and Google (GOOG). Nevertheless, it also fell into congestion early on. The downside bias remained in play and the indices broke strongly lower around 10:15 ET.

The selling pressure was very strong and the market fell quickly to new lows on the day and had soon busted through Wednesday's as well. The Nasdaq found strong support when it hit an equal move as compared to the move into the prior morning at about 10:30 ET. While not a typical correction period, all three of the major indices held lows at this time, but they pulled slowly off them to begin with. The upside momentum increased once a minor pullback into the 11:15 ET correction period broke higher, taking the indices through their 5 minute 20 period simple moving averages.

The upside accelerated into 11:45 ET and returned the indices into the early morning congestion. A nice bull flag formed at that resistance zone and was followed by another move higher into the early afternoon. Prior highs and the 5 minute 20 period simple moving averages served as resistance in each of the indices and the market was able to roll over once again.

The morning action essentially completed the move that I had been expecting to take the entire day on Thursday. It left the door open for the remainder of the day and the bias quickly turned lower when the market held resistance and then formed an Avalanche pattern along the 5 minute 20 sma. It broke rapidly lower once again, taking the market back to the morning lows, but the momentum slowed at that support, so the indices were able to bounce rather quickly.

The rapid bounce confused matters somewhat since it turned the momentum back to the bullish side, but when resistance again hit it pulled sharply of that level into the 15:00 ET correction period. It based there instead of forming more of a range back into that 5 minute pivot high. By pulling back and then basing, it created another Avalanche pattern, which led to yet another selloff into the last 45 minutes of the day. It took the indices back to the lower end of the 15 minute trend channel, as well as the 15 minute 200 sma in the S&Ps where it closed.

The Dow ($DJI) lost 120.40 points, or 1%, and closed at 12,302.46. 28 of its 30 components lost ground on the day. Leading the downside were Intel (INTC) (-3.5%), Bank of America (BAC) (-3%), J.P. Morgan Chase & Co. (JPM) (-2.8%), and Boeing Co. (BA) (-2.7%). The S&P 500 ($SPX) lost 15.37 points, or 1.1%. It closed at 1,325.76. Top decliners were MEMC Electronic Materials (WFR) (-10.1%), Lehman Brothers Holdings (LEH) (-8.9%), and Washington Mutual (WM) (-8.4%). The tech-heavy Nasdaq Composite ($COMPX) remained the weakest of the three indices, falling 43.53 points, or 1.9%, to close at 2,280.83. Some of the top losers were Apollo Group (APOL) (-7.5%), and Oracle (ORCL) (-7.2%).

As we head into Friday, the index futures are up strongly in afterhours trading. They have returned to the level of congestion prior to the final afternoon breakdown on Thursday. While this is resistance, the increased momentum has me favoring even more upside off the afterhours lows. I would like to see a longer daily range before the market can really take off from this congestion. A move into the upper end of the daily range and then another pull off it would be best for a larger breakout to highs in a week or so. The 20 day sma will serve as support throughout the congestion.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Correction Continues

Good day! The market pulled in on Wednesday, continuing the correction which began Monday afternoon following several days of strong upside momentum. The day began with a moderate gap lower, brought about by afterhours selling when the gradual upside momentum triggered a breakdown into the final hour of trading on Tuesday. The durable goods data came out ahead of the open, but had very little impact upon immediate trade action. Orders for durable goods, which is used to gauge business spending, fell 1.7% in February. Such activity is typical during recessions and provided further evidence of one currently underway. The technical breakdown pattern on that 15 minute time frame, however, continued into the open and the downtrend remained in play until the 10:45 ET correction period hit.

Support was extremely strong at the 10:45 ET levels. The Nasdaq had ran into Tuesday's lows, as well as its 5 minute 200 period simple moving average. The Dow Jones Ind. Ave. had closed its Monday morning gap and had hit an equal move support level as compared to the reversal off Monday's highs and into Tuesday morning. Even the S&P 500 had support in the form of Monday's opening price.

The market bounced well as it came off the lows. The momentum was sharp initially, and although it slowed as it ran into resistance again into noon, it was unable to resume the earlier downside with any conviction. Volume dropped off significantly and the market merely chopped lower over noon and into the early afternoon. 14:00 ET is a key turning point in the market in afternoon trade. By maintaining the base into that level and pulling up into the 5 minute 20 period simple moving averages, the bias turned in favor of the bulls.

The market immediately began to rally as the 14:00 ET correction period hit. The initial wave of buying took the indices into the upper end of the mid-day trading range. At that point is stalled and the S&Ps and Dow both formed small two-wave continuation patterns on the upside into 15:00 ET. Adding fuel to the fire were another strong late day pop in Bear Stearns (BSC) thanks to intervention from the Federal Reserve and the announcement from Rambus (RMBS) that a federal jury voted in its favor in an anti-trust/fraud suit. These events took place at approximately the same time and the market shot higher.

Unfortunately the indices did not have as easy of a time maintaining the late day gains as it had making them. After peaking into 15:00 ET they began to swiftly retreat. The selling continued into the close with losses of 109.74 points in the Dow ($DJI), or 0.9%. It closed at 12,422.86 with Citigroup (C) falling 5.8% and J.P. Morgan dropping 4.2%. Another top loser was American Express, which closed lower by 4.5%. The S&P 500 ($SPX) dropped 11.86 points, or 0.9%, on Wednesday. It closed at 1,341.13. The Nasdaq Composite held up somewhat better, but still posted losses. It fell 16.69 points, or 0.7%, and closed at 2,324.36.I am favoring some downside in the morning on Thursday, followed by another round of buying into the close. My bias, however, is not a strong one and I am going to mainly be watching for the opening price levels to provide some better guidance.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Corrects with Range

Good day! Market action was choppy and rather indecisive throughout much of the session on Tuesday. The extreme upside of the prior two sessions had exhausted the momentum for that direction, but the bulls were not quite willing to let go of their long-awaited gains. The day began with very little change from the prior day's closing levels. Despite some decent premarket swings back and forth, the indices merely formed a larger 15 minute trading range.

Within minutes of the opening bell the indices were again moving higher within the premarket range, pulling up off the last premarket low. Although the pace of the move was strong, the 9:45 ET reversal period held in the middle of the range with the 15 minute 20 period simple moving average serving as resistance on the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) intraday.

The market turned lower coming off the intraday resistance and heading into the 10:00 ET consumer confidence data. These losses became even more extended intraday thanks to a much lower reading than expected. The March consumer confidence levels was expected to come in at about 73.3. Instead the consumer confidence index fell from 76.2 in February to 64.5. This is the lowest level it has hit since 2003.

After flushing lower on the data, the market began to recover. Trade was very choppy. The Nasdaq Composite displayed the greatest relative strength, nearly making it back to the day's highs around 11:30 am. This was followed by the S&Ps. The upside had a great deal of overlap as it moved. One bar on a 5 minute time frame included nearly all of the prior one before moving up again. The bull flag which followed was was not very clear as a result, since the momentum on the pullback was stronger than the rally, although volume remained light and the 12:00 ET correction period favored support.

The market continued to creep higher with slightly higher highs into the afternoon. Volume remained the lightest it has in several weeks. It was not until around 14:00 ET that things began to shift. At that point the indices had established three waves of upside intraday with slower overall momentum on each wave. On the final move into 14:00 ET, however, the end of that move increased in momentum, making a sharp reversal difficult.

I had originally been expecting the market to pull lower into the afternoon. The reason I favored this move is because it would have allowed the market to more easily form a longer range for more upside. With just one low on the 30 minute charts within that base at highs, the market would be more likely to form a false upside breakout if it did trigger and just trap people before breaking lower again. Nevertheless, the indices still kept climbing with a final bull flag out of 14:30 ET and into the 15:00 ET reversal period.

The breakout was indeed false when taken into perspective on the larger 30 minute charts. The market began to give way to selling pressure during the final hour of trading with many stocks, such as Baidu (BIDU), falling hard into the closing bell. The weak Dow lost 16.04 points, or 0.1%, on Tuesday, closing at 12,532.60. Top decliners were Bank of America (BAC), which fell 3.5%, and Home Depot (HD), which lost 1.7%. The stronger S&P 500 gained 3.11 points, or 0.2%, and closed at 1,352.99. The Nasdaq, which had the best relative strength on Tuesday, gained 14.30 points, or 0.6%, and settled at 2,341.05.

I am expecting some more corrective action on Wednesday, but on the daily and weekly time frames the indices are looking pretty good. If they can pull off a slow correction along these highs instead of sharply declining, then another solid breakout higher in a couple of weeks is likely. The Dow will have the hardest time pulling off such a correction, while the Nasdaq has the best chance.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Extends Last Week's Gains

Good day! The market had another strong session on Monday, following through on last week's momentum. Intraday the ES hit highs at the 1361.5 resistance level I targeted last Wednesday and held that high perfectly. The NQ also came directly into the middle of last month's congestion, which we had also been tracking. This zone hit strongly at first in the initial 90 minutes of trading, but momentum slowed as the day continued, stalling over mid-day.

The top story of the day on Monday was once again in Bear Stearns (BSC). BSC was up over 100% following news that J.P. Morgan had quintupled its offer from last Sunday's $2/share to $10/share. This move supported further buying in the financial sector. The Amex Securities Broker Dealer Index rose 2.9% on the day. Some of the financial firms, however, did not hold up as well. Lehman Bros. Holdings Inc. (LEH) fell 4.1%, while Goldman Sachs Group, Inc. (GS) lost 0.4%, Wachovia Corp. (WB) shed 1.5%, and Morgan Stanley (MS) fell 1.8%.

Monday's session began with immediate upside, gapping slightly higher and running straight away. It stalled after about 15 minutes with the 9:45 ET correction period. At that point a range began with the indices hugging highs into the 10:00 ET housing data. Currently, some of the best performers in the S&P are in the housing sector. The morning data boosted gains even further when the National Association of Realtors reported that sales of existing homes in February rose by 2.9% to a seasonally annualized rate of 5.03 million. This beat the 4.85 million pace that was widely anticipated and was the strongest move since last October. Meanwhile, inventories of unsold homes fell 3%. Although still high, this was viewed as very positive. The median sales price dropped to $195,900, which is 8.2% lower than this same time last year. Additional data will be coming out on Wednesday when the Commerce Department reports on sales of new homes.

The strong momentum of the opening action began to slow once the 10:15 ET correction period hit. The indices began a series of bull flags with the Nasdaq holding up the best initially. A higher high brought the market to another peak on the 5 minute charts at the 10:45 ET correction period and the market continued to step higher into the early afternoon with a series of bull flags on the 5 minute time frame. The 5 minute 20 period simple moving average served as support and the lighter volume on each correction favored the upside bias.

By early afternoon, the indices were very well extended. The ES was hitting that resistance target I mentioned earlier and the Nasdaq Composite had also hit equal move levels on a 30 minute time frame as compared to the rally from last Monday and into Wednesday. The slightly higher highs of each bull flag shifted the market's pace from the strong momentum of the opening action to the more moderate upside into lunch. It shifted even further into the early afternoon. After hitting the 5 minute 20 sma zone once again around 13:00 ET, the market was unable to again mount another move to new highs. It fell slightly short of the last highs and began to move sideways on very light volume.

The rounded highs broke with the 14:00 ET correction period, pushing through the 5 minute 20 sma support and gaining speed on the downside as compared to the most recent buying. This weakness remained in play for the remainder of the afternoon. A slow ascent into 14:30 ET created a 5 minute Avalanche type of pattern, leading to a stronger drop into 150:00. A third wave followed coming off the 5 minute 20 sma resistance, although the pull higher into that 20 sma was faster than before and the selling somewhat more gradual into the close. This allowed the indices to bounce and hold up within the afternoon range during the immediate afterhours activity.

The Dow Jones Industrial Average ($DJI) posted gains on the close of 187.32 points, or 1.5%. It ended the session at 12, 548.64 with 27 of its 30 components in positive territory. The S&P 500 also rose 1.5%. This amounted to a 30.27 point advance into 1,249.88. The Nasdaq Composite Index ($COMPX) was the darling of the day thanks to its technology components. It rose a whopping 3%, or 68.64 points, and closed at 2,326.75. The Russell 2000 performed even better with a 3.89% in the futures market. Seminconductors ($SOX) alone rose 3.7%. Notable standouts in the technology sector included Apple Inc. (AAPL) with a gain of 4.7%, Google Inc. (GOOG) with a 6.2% upside move, and Hewlett-Packard Co. (HPQ), which rose 3.1%. I think we may still see these gains extend even further into the early morning trade, but am looking for a correction off resistance into the afternoon on Tuesday.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Relief in Sight?

Good day! The market posted its first weekly gains in a month last week after the back broke on Bear Stearns (BSC), plummeting it to $2.84 on Monday after the announced buyout by J.P. Morgan Chase for $2/share on Sunday. The indices were all over the place throughout the week, but the action is still quite bullish heading into the new trading week next week. Many are speculating that this past week's crash and recovery are what was needed to flush out the market and open the door for further upside at this point.

After watching the news on the housing market here in Florida where people are practically giving away homes and after having talked to my realtor, who was kind enough to tell me that my house can now be sold for about 50% less than what I originally listed it at, I am still wondering that, while panic is surely at hand, have enough backs been broken? Nevertheless, I am also favoring further upside into the end of the quarter in the overall market, but we are likely to continue to see higher levels of volatility with it.

Last week ended with a gain of +261.66 points, or +2.2%, in the Dow Jones Industrial Average ($DJI) on Thursday. It closed at 12,361.32 with a gain on the week of +3.5%. The S&P 500 ($SPX) added +31.09 points, or +2.4%, on Thursday. It closed at 1,329.51 with a weekly gain of +3.3%. The Nasdaq Composite ($COMPX) rose +48.15 points, or +2.2%. It closed at 2,258.11 on Thursday for a weekly gain of +2.1%.

The session began on Thursday with hesitation. The market had flipped from an uptrend day on Tuesday to a downtrend day on Wednesday and the trend continued into Tuesday's afternoon lows in the first 15 minutes of the new session. That strong price support level, combined with the 9:45 ET correction period, held very well and the market quickly broke the trend, pushing higher into 10:00 ET. The 5 minute 20 period simple moving average hit as resistance in the Nasdaq, while the 5 minute 200 sma hit in the Dow and S&P. The momentum lost ground throughout the rest of the morning, creeping higher with slightly higher highs until finally breaking the channel with a sharp flush around 11:30 ET.

Even though the market held resistance well into noon, the momentum shift did not hold. Instead, a second move lower into 12:30 ET was at a much more gradual pace and on light volume, creating more of a bullish bias into the afternoon. The indices continued to congest along the 15 minute 20 sma and then the 5 minute 20 sma. The range broke around 13:30 ET, moving sharply higher into the mid-afternoon.

The 5 minute 200 sma served as initial resistance on the afternoon rally. The Nasdaq formed a decent bull flag at that level, but action in the Dow and S&Ps was not as obvious as continuation pattern due to rounded highs. The ranges on these corrections off highs, however, still broke higher around 14:30 ET. This kicked off a second afternoon rally that took it into price resistance from the previous afternoon. A double top formed on the 5 minute time frame into the close with closing prices at the second high, followed by another correction off highs in afterhours trade.

In other markets this past week, a number of declines have taken place. The euro peaked on Monday and is now pulling back sharply, allowing the dollar to finally recover to some extent. Commodities with close ties to the dollar came under pressure. Crude oil and gold both experienced their sharpest downside moves in years. Crude oil hit record highs at $112.75/barrel a week ago Friday. It closed this past week at $101.84/barrel. Meanwhile, gold hit a record high on Monday at $1,034/ounce, but by the end of the shortened trading week it was down 8.3%.

Economic concerns remain strong despite the market's recent recovery action. On Thursday the Labor Department reported that first-time claims for state unemployment benefits hit 378,000 for the week ending at March 15. This was a rise of 22,000 and brought focus to a weakening labor market. In a separate report, the Conference Board reported that the index of leading economic indicators fell 0.3% in February, marking the fifth-straight month it has fallen. The January leading index was also revised lower by 0.3% from a 0.1% decline to a loss of 0.4%. Finally, while the Philadelphia Federal Reserve Board announced that, while sentiment among manufacturing firms improved from negative 24 to negative 17.4, the levels are still very low.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, March 24, 2008
10:00a.m. Feb Existing Home Sales. Previous: -0.4%.

Tuesday, March 25, 2008
7:45a.m. ICSC Chain Store Sales Index.
8:55a.m. Redbook Retail Sales Index.
10:00a.m. Mar Conference Board Consumer Confidence. Previous: 75.
10:00a.m. Mar Richmond Fed Manufacturing Index. Previous: -5.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, March 26, 2008
8:30a.m. Feb Durable Goods Orders. Previous: -5.3%.
10:00a.m. Feb New Home Sales. Previous: -2.8%.

Thursday, March 27, 2008
8:30a.m. Initial Jobless Claims.
8:30a.m. 4Q Final GDP. Previous: +0.6%.
8:30a.m. 4Q Corporate Profits.
10:00a.m. Feb Help-Wanted Index. Previous: 21.
10:00a.m. DJ-BTMU Business Barometer.

Friday, March 28, 2008
8:30a.m. Feb Personal Income. Previous: +0.3%.
8:30a.m. Feb Personal Spending. Previous: +0.4%.
10:00a.m. End-Mar Reuters/U Mich Sentiment Index.


Key Earnings Announcements This Week:

Monday, March 24, 2008
Before: CFSG, SGK, TIF, WAG
After: COMS, CHCI, PVH, RDNT, SONC

Tuesday, March 25, 2008
Before: CMRG, CMC, CONV, FIG, KIRK, QXM
After: FSII, JBL, PBY, SAI, UBET

Wednesday, March 26, 2008
Before: MNTG
After: CTRN, MGI, ORCL, PAYX, RECN, RBN, RUBO

Thursday, March 27, 2008
Before: CHINA, CHTT, CAG, CONN, CAO, DSW, EGO, FRPT, FRED, IART, KBH, LEN, MKC, MOV, NOVN, SCHL, SOLF, TXI, UTIW, WCG, WMAR, WTSLA, WSM
After: ACMR, ACN, APOL, GRRF, DM, FINL, GIII, HMX, JRT, LTON, MRGE, RHY, SCS, TIBX, PAY, VIMC, XRTX

Friday, March 28, 2008
Before: CYCL, IAG
After: CKR

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!

Market Rallies on Fed Tuesday

Good day! The markets soared on Tuesday's highly anticipated Fed day. The session began with a strong gap higher, right into the end-of-day trading from Friday. This gap exhausted the market temporarily, but market players still kept their eyes out on the larger prize: the afternoon Fed rate cut. Typical Fed days begin with upside, but Tuesday's was exceptional. Although stuck in a congestion zone throughout the first half of the morning, prices broke higher between 10:30-11:00 ET. A bull flag into about 12:30 ET with the 5 minute 20 sma as support led to a continuation move throughout the first half of the afternoon.

A glimpse into the market's initial bias ahead of the Fed's rate announcement began at 14:00 ET when the uptrend channel broke lower. The market had been widely prepared for a full point cut, but Sunday's 25 basis point cut ended up factored into the Fed's decision and resulted in a 75 basis point cut on Tuesday. The selling accelerated on the downside as initial disappointment hit, followed by a second reaction back to the 5 minute 20 sma resistance before moving for a third wave of reaction. This time it was once again on the downside, falling into 14:30 ET and the morning's lows. The 15 minute 200 sma zone also served as support.

Slightly lower lows created a trap pattern and the market rolled over into the final 90 minutes of trading, moving strongly higher into 15:00 ET and then basing at the highs before slowly continuing higher into the closing bell. The Dow Jones Ind. Ave. ($DJI) managed to rally a whopping 420.41 points, or 3.5%, on Tuesday. This was the strongest point gain since July 29, 2002. It closed at 12,392.66. Citigroup (C) led the way with an 11.22% gain, while American Intl (AIG) added 9.72% to its share price. GM, BAC, JPM, HD, and GE all gained more than 5%.

The S&P 500 ($SPX) rose 4.2% on Tuesday for a total of 54.14 points. It closed at 1,330.71. Goldman Sachs (GS) rose 16.3%, while Lehman Brothers Holdings (LEH) climbed 46.4%, and Bear Stearns (BSC) rose 22.9% on disputes by shareholders against the buyout by J.P. Morgan Chase (JPM). The Nasdaq Composite ($COMPX) performed equally well with a 4.2% gain, amounting to 91.25 points. It closed at 2,268.26. Top performers included Sepracor Inc. (SEPR) (+9.91%), UAL Corp (UAUA) (+7.94%), ahd Amazon (AMZN) (+7.77%).

The action on Tuesday leaves the market favoring more upside in the immediate future. The Nasdaq has rounded off at the daily lows and follow-through is likely over the next several days. I am not expecting moves like Tuesday, but will be very cautious on the short side. 1361.5 is ES daily resistance. 1800 and 1888.5 are NQ resistance levels to watch out for.


Notice: I will be taking an extended weekend with my family so I will not be releasing a column tomorrow evening. The Daily Market Action Letter will resume on Monday. Have a wonderful weekend!

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Makes Hesitant Recovery Following BSC Buyout News

Good day! The market was back and forth throughout the day on Monday. The day began with a sharp downside gap following the surprising announcement that J.P. Morgan and Chase (JPM) would be buying out Bear Stearns (BSC) for $2/share. This was a staggering 84% lower than the prior day's close. Other financial institutions were also significantly hit. Lehman Brothers (LEH) fell 19.1%, Merrill Lynch & Co. (MER) lost 5.4%, and Goldman Sachs Group. (GS) lost 3.7%. Although the market began to recover after the Federal Reserve cut its lending rate from 3.5% to 3.25%, the gap into the open was enough to still leave the indices severely oversold and favoring a move higher.

As I mention on Thursday, most extreme gaps into the open in the market will begin to close within the first 15 minutes of the day. Thursday's took a bit longer, but this was not the case with the beginning of the new week. The market climbed steadily out of the open. There was a lot of overlap in prices, but the move was still steady. The Dow Jones Industrial Average, led by a 10.32% gain in JPM, had the easiest time completing the gap closure, while the pace on the Nasdaq Composite was excruciating. Neither the S&P 500, nor the Nasdaq, were able to complete the gap closure, although they came close by testing lows of a swing into Friday's closing bell.

When the indices struck their 15 minute 20 period simple moving averages, the reaction was immediate. The market bounced off the resistance and began to move through the lower channel from the morning's upswing. The selling continued into 11:30 ET, at which point a small range formed under the 5 minute 20 sma to create a continuation pattern lower into noon. The 12:00 ET reversal period held for a few minutes, but slower selling into 12:30 helped the market begin to roll over into the early afternoon.

The 5 minute 20 period sma was initial resistance for the market with the 13:00 ET reversal period. The indices retraced off the resistance, making their way to a very slightly lower low into 13:30 ET. The channel broke quickly to the upside when it gave way and soon the 15 minute downtrend channel was also busted. Earlier congestion served as resistance in the S&Ps and Nasdaq, but the stronger Dow was almost able to hit the morning's highs, coming into the 5 minute 200 simple moving average zone.

A pullback to the 5 minute 20 sma on light volume into 14:30 ET resulted in a continuation of the mid-afternoon upside. the momentum was a bit more choppy, but it was steady, moving back into morning highs and the price resistance which accompanies such a level. It held the zone well and although the Dow ($DJI) had been up by more than 100 points on the move, the indices pulled back into the close. It ended the session up 21.16 points (+0.2%) at 11,972.25. The S&P 500 ($SPX) was not as lucky. It still posted losses of 11.54 points, (-0.9%), to close at 1,276.60. The Nasdaq Composite ($COMPX), which had the least relative strength, fell 35.48 points (-1.6%) to 2,177.01.

On Tuesday, the Federal Reserve meets once again. It is speculated that, despite the 25 basis cut on Sunday, the Fed may cut rates by up to another point. Typically a Fed day begins with some upside in the morning, followed by much lighter trading over noon. Risk increases at this point, peaking directly after the 2:15 ET announcement. Three waves of reaction then follow. These often take place first on 1 minute time frames and then the larger 5 minute time frames. An initial reaction, is usually followed by a secondary reaction, which may be stronger than the first, and then a third move in the same direction as the first.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Tumultuous Session Completes the Week while Additional News Weighs Heavily into the New One

Good day! Well... perhaps not for everyone given the latest shakeup in the marketplace, but it has at least been eventful! It is markets like these that can make or break a trader or investor. Bear Stearns (BSC), a name that has been a cornerstone in the financial world for nearly a century, turned up the heat on Friday when it announced that its ability to support itself was in dire jeopardy. It had little choice other than to accept a bailout package from the Federal Reserve and J.P. Morgan Chase, which did little to provide much sought-after reassurance.

The indices went into free fall mode within 15 minutes of the opening bell, not stopping until they had hit Thursday's lows at about 10:00 am ET. Although the market held true to the bias we had been looking at going into the day, whereby it favored a larger range within the zone of Thursday's trade, it was not at all a pretty picture. The market bounced well off the lows, but held the middle price levels of the descent and began to correct through a larger trading range into mid-day.

Volume dropped off as market players digested the morning's move and considered whhich course of action would be the most prudent. When one of the big boys like Bear Stearns is vocalizing its worries, particularly after earlier reassurances aimed to ease investor concerns, then all is most certainly not well. Just how unwell "unwell" meant did not make itself known until Sunday evening, but I shall get to that a bit later.

As the market corrected into the second half of the day's trade on Friday, a narrowing channel formed by way of a symmetrical triangle. Upside moves became more and more stunted as the range progressed, creating a bearish bias into the early afternoon. Due to the morning's price action, however, downside was somewhat limited. In order to continue a move of that magnitude on a second wave of selling, the market will tend to have a longer relative correction from the descent than it would a normal selloff. The early afternoon breakdown, for instance, would have retraced back to the middle of the triangle, or even the upper end of it before it would break sharply lower on a continuation.

When Friday's breakdown took place into 12:30 ET, the volume was still on the light side and the momentum was not very strong. This created favor for a bounce before it would continue. Instead of pulling all the way back up to within the range, however, the market only tested 5 minute 20 simple moving average resistance level and stayed in the lower segment of the earlier triangle. While volume was lighter on this upside than on the downside and the momentum was gradual, favoring a break lower, this also meant that the break would not be nearly as extreme as the morning move and that the zone of morning lows would remain a key support level.

The market managed a decent recovery into the final 90 minutes of trade on Friday, coming off that second afternoon continuation on the 5 minute by pulling up to the 5 minute 20 sma. It rested there for about half an hour, and then broke strongly higher shortly after 15:00 ET. This move took the indices back to the upper end of the morning range, as well as 5 and 15 minute 200 period simple moving average resistance zones. A retracement back to the 5 minute 20 sma held with the market closing down 194.65 points in the Dow (-1.6%), 27.34 points in the S&P 500 (-2.1%), and 51.12 points in the Nasdaq Composite (-2.3%).

Bear Stearns (BSC) fell 47% on Friday, but other financials were also badly hit. Citigoup (C) dropped 6.1%, American Express fell 4%, J.P. Morgan lost 4.1%, Goldman Sachs lost 5.2%, and Morgan Stanley shed 4.9%. To magnify the situation, on Sunday Bear Stearns made the shocking announcement that it was working on a buyout by J.P. Morgan Chase & Co. for a mere $2/share. The Fed stepped in to try to cushion the blow by cutting interest rates another 25 basis points just two days prior to an anticipated 75 basis point rate cut most had been expecting coming out of Tuesday's meeting. Although the index futures had been trading higher on Sunday, they again plummeted Sunday evening on the heels of BSC's news. The next major support zone in the market is going to be the 2006 lows in the S&P 500.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, March 17, 2008
8:30a.m. Mar NY Fed Manufacturing Report. Previous: -11.72.
8:30a.m. 4Q Current Account Balance. Previous: -$178.5B.
9:00a.m. Jan Treasury International Capital Flows. Previous: $45.2B.
9:15a.m. Feb Industrial Production. Previous: +0.1%.
9:15a.m. Feb Capacity Utilization. Previous: 81.5%.
1:00p.m. Mar NAHB Housing Market Index. Previous: 20.

Tuesday, March 18, 20087:45a.m. ICSC Chain Store Sales Index For March 15.
8:30a.m. Feb Producer Price Index. Previous: +1.0%.
8:30a.m. Feb PPI, Ex-Food & Energy. Previous: +0.4%.
8:30a.m. Feb Housing Starts. Previous: +0.8%.
8:55a.m. Redbook Retail Sales Index For Mar 15.
2:15p.m. FOMC Policy Statement
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, March 19, 2008
10:15a.m. Crude Inventories

Thursday, March 20, 2008
8:30a.m. Initial Jobless Claims.
10:00a.m. Feb Conference Board Leading Indicators. Previous: -0.1%.
10:00a.m. Mar Philadelphia Fed Business Index. Previous: -24.
10:00a.m. DJ-BTMU Business Barometer.

Friday, March 21, 2008
There are no economic indicators scheduled for today.


Key Earnings Announcements This Week:

Monday, March 17, 2008
Before: KDE, CNTY, CNO, ENCY, HWCC, PMI, SGK, USBE, WCI
During: BXXX
After: COSI, DEIX, EXM, PODD, JUPM, PERY, SHFL, SYNM

Tuesday, March 18, 2008
Before: AMT, CRYP, FDS, GME, GTOP, GS, LEH, QXM, SMTS, TNP
After: AIR, ADBE, DRI, FMCN, FSII, HWAY, RADN, UBET

Wednesday, March 19, 2008
Before: ATU, AES, CHRS, DFS, GIS, MCS, MS, RTLX, ROST
After: BGP, IMOS, CTAS, CLC, CPWM, DDS, GES, IHS, LEV, MGI, NKE

Thursday, March 20, 2008
Before: BKS, BSC, BRNC, CCL, CMRG, CTR, CHTT, PLCE, CRAI, CAO, CYCC, DLIA, FDX, IART, KBH, MNTG, NWY, PRGS, SCHL, SCVL, SOLF, SMRT, WCG, WSM, WGO, WOR
After: COMS, TDSC, ACMR, ABTL, GRRF, CSC, EGLS, GIII, MLHR, JRT, MRGE, NINE, PALM, RDNT, SMOD, SNX, TRLG, PAY, VIMC

Friday, March 21, 2008
Before: -
After: -

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!

Market Recovers Losses and More

Good day! Thursday began on a rather sour note, gapping sharply lower on the continued downside we had been seeing afterhours the night before. This gap led to an open right at those price levels from Tuesday morning, which I had pegged as the next major support. The S&P 500 and Dow Jones Ind. Ave., however, opened at the lower end of the opening range, whereas the Nasdaq opened in the upper end of it. Continued weakness out of the gate led to the S&Ps and Dow eventually making it back into Tuesday's lows and a little beyond in the S&Ps. The Nasdaq Composite held up more readily and maintained a price level still within the Tuesday morning congestion.

Part of the morning tumble was attributed to news from Carlyle Capital (CARYF), which is a bond fund, that stated that it was unable to meet the margin calls on its portfolio of securities backed by residential mortgages. The fund fell 97.6% on Thursday. Other companies facing the same pain include Bear Stearns (BSC) (-7.4%), Citigroup (C) (-0.7%), UBS (UBS) (-0.9%), and Deutsche Bank (DB) (+0.1%). To top this, Treasury Secretary Paulson also called for banks to reconsider their dividends in an effort to curb the outward flow of capital.

Economic data also influenced the morning's activity. The Commerce Department reported early Thursday morning that consumer spending weakened once again in February. U.S. retail sales were down 0.6%, lower than the no-change status that most had been anticipating. First-time claims for unemployment benefits had little impact. The data came in as the same as which had been revised for the week before: 353,000.

After the initial reaction to the open wore off, the market was able to pick itself up extremely well. A strong 800 tick buy setup had formed in the S&P EMinis going into the 10:45 ET reversal period and it triggered sharply into 11:00 am ET. The setup received a very welcome boost from a report by Standard & Poor which fueled speculation that banks may be close to seeing an end in sight in terms of the current subprime meltdown.

The Dow had been down by 235 points in morning trade, but the S&P 500, Dow Jones Ind. Ave., and Nasdaq Composite all closed the zones of their morning gaps into noon. A nice mid-day correction began coming out of that reversal period, but it lacked any real bearish bias intraday, hugging the 15 minute 20 sma on light volume. This kept me in a bullish frame of mind into the afternoon.

The breakout to new intraday highs happened rather quickly. It began after a short two-wave correction over lunch and took off into 13:00 ET. The indices hit equal move resistance into 14:00 ET, as well as price resistance from the prior session. The momentum shifted at these highs, but not enough to lead to any sharp reversal in the final two hours of trading. The indices hugged the 5 minute 20 sma support throughout most of the final hour, leading for a bearish bias on that time frame into the close, but there was not enough time to see any strong follow-through on the setup until afterhours, when the market dropped sharply back into the 13:00 ET support levels.

Although they moved quite a bit lower after the bell, the Dow closed with a gain of 35.42 points, at 12,145, while the S&Ps gained 6.71 points to end the regular session at 1,315, and the Nasdaq Composite added 19.74 points, closing at 2,263. I am favoring a range on the 60 minute time frame heading into the weekend.


Note: the charts below are created using March futures contracts to show the best comparative data, however, the current month to use is June. The June futures symbol is M.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Applying Fibonacci to the Market

Hey gang,

Part 2 of my Trading Market series is now available! I hope you enjoy!

All my best,
Toni

Opening paragraphs:

The dimensional properties of Fibonacci Series, introduced to the West by the 12th century mathematician Leonardo Pisano, aka "Fibonacci", offers a popular tool to contemporary traders and market analysts. In the first installment of this three part series on Fibonacci I acquainted you with the development and key characteristics of Fibonacci series.

In this second installment of this educational series I will begin to explore the practical applications of utilizing Fibonacci levels while trading. In it, I will teach you not only how to draw Fibonacci grids correctly, but also how to read the projected price levels. This goes beyond simply identifying the actual price, to tools for taking a position based upon those price zones...

LINK: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-75657.cfm

Market Posts Losses Despite Strong Open

Good day! The market had an interesting session on Wednesday. Heading into the close the prior day I had been expecting to see a bit more corrective action Wednesday morning, but while the market did pull lower for the first 30-45 minutes of the day, the 5 minute 20 period simple moving average held extremely well and the market rallied strongly off the support. It remained strong until the 11:15 ET correction period hit. Rallies such as those which took place on Tuesday afternoon rarely continue past the first hour of trading the next day. The opening correction did help with this, but it still marked one of the most extreme rallies the market has experienced without taking longer to catch it breath on the way.

Once the market pivoted, it did not take long for it to break through the lower trend channel on the 15 minute time frame. Instead of forming some decent textbook trade patterns, however, things got a bit dicey. The market displayed a markedly bearish bias into the early afternoon, but it didn't really have the strongest, most recognizable bear flags and continuation patterns. Instead one had to rely primarily on the fact that the 15 minute time frame simply had to put in a larger correction given its price exhaustion.

The Nasdaq had a decent channel break coming off 13:30 ET highs, at which point the S&Ps and Dow had perhaps the most obvious bear flag. This was followed by rather mild selling into morning support before the market bounced back into the early afternoon range between 14:15-14:45 ET. The strongest downside move of the day came in the final hour of trading, led by the Nasdaq Composite, which completely fell apart beginning at about 15:00 ET. The selling continued into the close, although the momentum stalled in the final 15 minutes of trade.

The indices finished the day with a 46 point loss in the Dow Jones Industrial Average, an 11.88 point loss in the S&P 500, and an 11.89 point loss in the Nasdaq Composite. 18 of the Dow's 30 components closed lower. The top losers included American Express (AXP) (-2.5%), Microsoft (MSFT) (-2.2%), AT&T (T) (-2.1%), and Bank of America (BAC) (-1.8%).

Making headlines on Wednesday was the fact that once again the dollar had fallen to new lows against the euro and crude oil again hit new highs following positive economic data from January's industrial production in the 15 nations which make up the currency. The euro hit a new highs of $1.5569. Crude oil for April delivery hit an intraday high of $110.20/barrel on the New York Mercantile Exchange, gaining 1.1% on the day.

Wednesday's highs intraday corresponded to the 20 day simple moving averages. This level can be a tough one to break in terms of a resistance zone, particularly once it has fallen out of a trading range such as the one which took place throughout February, and then retests the 20 sma shortly thereafter. I am going to remain more bearish into Thursday, but so far the market is heading strongly lower in afterhours trade. This can leave it with a decent gap down unless it can mange to recover in the early morning premarket hours. 3-4 am ET is a typical time frame for such corrections to take place. The congestion from Tuesday's opening action is going to serve as price support on the 15-60 minute time frames.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Rebounds on Fed News

Good day! The market took off on Tuesday with an extreme upside move that I certainly had not expected. Yes, we were looking for upside on Tuesday, as I mentioned in yesterday's column, but I was not anticipating anything along the lines of the sharp upside move experienced by the indices on Tuesday. The day began with a very rapid rally at 8:30 am ET. The Fed announced that it would loan as much as $200 billion in securities in order to increase liquidity.

When the market opened on Tuesday, the prices were already very overbought. The exhaustion from the initial premarket reaction had extended the indices to a point whereby they found it very difficult to continue at such a pace, if not impossible to do so. The market's reaction was to chop lower though out the morning. The indices found support, however when the 12:00 ET correction period hit. after bouncing into the 5 minute 20 sma resistance, the market retested the day's lows, but it did do at a slower pace and on lighter volume, corresponding to the 15 minute 20 sma support. This created a bullish bias into the afternoon.

The market took off immediately into 13:00ET . Although the 5 minute 20 sma stalled the bulls for a few minutes, it did not last long at all compared to the extreme upside which followed. My focus was upon Apple (AAPL) and Bucyrus Intl (BUCY) during afternoon trade but a lot of other stocks faired well also. In the Dow, only Boeing Co (BA) closed lower.

Once the market planted a foothold on Tuesday, it began to gain momentum. It rather surprised me how fast the indices rode that rally. I was able to time the resistance levels, and hence the mostly likely pivot zones, extremely well. The problem was that each resistance level held for only a couple fo minutes, so it was the scalpers and larger time frame position traders tht would have come out of this with the greatest reward.

The indices all closed at the day's highs. The S&P 500 also gained ground. The S&P 500 rose 47.28 points, or 3.7% compared hummus. I am expecting that on Wednesday we see a lot of overlap, holding Tuesday's range.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Selling Pressure Plagues the Market

Good day! The market did a fairly decent job of imitating the weather here today: cold and gloomy. I know, you northerners have great sympathy for me freezing when the weather happens to slip under 75 degrees, but still... brrr! By the closing bell on Monday the Dow Jones Industrial Average ($DJI) had shed another 153.54 points, or 1.3%. It closed at 11,740.15 with 26 of its 30 components losing ground, led once again by the financials. Citigroup, Inc. (C) lose 5.8%, while American Express Co. (AXP) fell 3.6%, and J.P. Morgan Chase & Co. lost 2.9%. McDonald's bucked the trend, however, after it reported an 11.7% climb in same store sales for February, adding 2.9% to its share price. The S&P 500 ($SPX) also fell throughout the day, losing 16.77 points, while the Nasdaq Composite ($COMPX) dropped 43.15 points, or 1.9%.

For the third session in a row, the market managed to spend nearly all of the day in a steady downtrend. The session began relatively unchanged, and showed little ambition throughout the better half of the morning. It remained stuck in a range until 11:00 ET, but within that range the upside was on lighter volume and the pace of the trading favored a break lower from the range. It still took until the 11:00 ET correction period, however, before the indices were able to manifest any follow-through.

Once the late morning selling hit, it only took about 15 minutes to break through the morning lows. The S&P 500 and Dow quickly returned to Friday's lows, but the Nasdaq held up a little better, hitting support just shy of Friday's lows. The selling had stalled into 11:30 ET, but continued into the 12:00 ET correction period. This is another common time for the market to correct from a prior intraday trend move. Although the indices had rounded off at these lows, however, the buyers still were unable to take the upper hand. The correction off the lows was very choppy with light volume and light momentum. All of these indicated underlying weakness despite the support.

Highs on the mid-day correction off lows corresponded to the 13:00 ET correction period. These mid-day correction periods did a very fine job of holding moves on the 5 minute time frame and it did not take long for the mid-day uptrend channel to break, setting off a second wave of selling intraday on the 5 minute time frame. Momentum was pretty decent and the indices continued to new lows on the day after a nice little continuation pattern formed heading into 14:00 ET.

The selling was enough to establish an equal move on the 5 minute time frame as compared to the morning's drop. This created price support into 14:30 ET, allowing the indices to correct once again into the final 90 minutes of the day. This final segment of trading was very similar to the first 90 minutes of the day, leaving the indices chopping around into the close. Since the market has now fallen for about three days, holding the 15 minute 20 sma for the most part throughout that descent (although not perfectly), I am anticipating a correction off lows with upside on Tuesday. The market has begun to correct already in afterhours trading in the indices, bouncing off the late-day lows.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic Reports and Earnings This Week

Economic Reports and Events This Week

Monday, March 10, 2008
10:00a.m. Jan Wholesale Trade. Previous: +1.1%.

Tuesday, March 11, 2008
7:45a.m. ICSC Chain Store Sales Index For Mar 8.
8:30a.m. Jan Trade Balance. Previous: -$58.76B.
8:55a.m. Redbook Retail Sales Index For Mar 8.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, March 12, 2008
2:00p.m. Feb Federal Budget. Previous: +$17.84B.

Thursday, March 13, 2008
8:30a.m. Initial Jobless Claims.
8:30a.m. Feb Import Prices. Previous: +1.7%.
8:30a.m. Feb Retail & Food Sales. Previous: +0.3%.
8:30a.m. Feb Retail & Food Sales, Ex-Autos. Previous: +0.3%.
10:00a.m. Jan Business Inventories. Previous: +0.6%.
10:00a.m. DJ-BTMU Business Barometer.

Friday, March 14, 2008
8:30a.m. Feb Consumer Price Index. Previous: +0.4%.
8:30a.m. Feb CPI, Ex-Food And Energy. Previous: +0.3%.
10:00a.m. Mid-Mar Reuters/U Mich Sentiment Index.


Key Earnings Announcements This Week:

Monday, March 10, 2008
Before: AIMC, BX, XJY, GOK, HITK, HYGS, IGTE, LCUT, LMIA, NOVN, SIX, MTN
After: ASHW, CSR, DWRI, FL, HOV, IPAR, JSDA, MIVA, UWN, FACE, QTWW, RADN, RSCR, SAFT, SYKE

Tuesday, March 11, 2008
Before: CAS, BONT, DKS, ESLT, ENG, GIGM, GSOL, GPX, KR, PLUG, QXM, RCNI, SGK, SEH, SSI, STEI, SWSI, BKE, VOL, WMAR
During: SAM, PNY, THO
After: BLTI, BUCA, PSS, DMNS, DIVX, EXLS, ICFI, JCG, JRT, MBLX, NGAS, OPMR, PBY, SVNT, SOMX, TTWO, UBET

Wednesday, March 12, 2008
Before: AES, AEO, CTIC, CGPI, JASO, JMP, MTCT, PMI, SMTS, SBSA, TRK, TTES, TLB, TLCV, VSE, VIP
After: AFCE, AIRM, GRRF, CHCI, DDS, GDP, GYMB, HOTT, JAS, JUPM, LEV, MW, MGI, NPSP, VITA, PRSC, SIGM, STAN, VM

Thursday, March 13, 2008
Before: KDE, AMT, ARD, BNT, BVF, BRNC, CCL, CRPY, CAO, DFS, EPEX, EFJI, GCO, GTOP, GLBC, HDIX, IFLO, IMAX, LNY, TMR, MEI, MNTG, NGPC, PEIX, SOLF, SURW, TICC, TRGL, ECG, WON, WSM, WPL
After: ACMR, ARO, ARTE, ABTL, CHDN, COGO, DEIX, DHOM, HILL, HRLY, HIBB, IFON, INTX, KNTA, MED, MRGE, NTN, PSUN, QOWR, QLTY, RDNT, SEAC, SRSL, TRLG, VIMC, ZIPR, ZUMZ

Friday, March 14, 2008
Before: ANN, GEL, LIZ, NVAX, STRL
After: PAY

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!

Market Faces Further Losses

Good day! The market was hit hard prior to Friday's open. U.S. payrolls fell by an unexpected 63,000 in February, making it the largest drop since March 2003. Economists had been expecting an increase of 20,000. Meanwhile, December and January payrolls were revised lower by 46,000. The unemployment rate also caught economists off guard, falling to 4.8% in February. Further pressure on the jobs market was brought about by the slow growth of average hourly earnings, which rose 5 cents to $17.80/hr, less than inflation. The indices plunged lower on the news and opened with a strong gap down, extending Thursday afternoon's closing selloff despite the Federal Reserve boosting liquidity ahead of the data.

Typically, when the market suffers an extreme loss in afterhours or premarket trading, leading to an extreme gap, then that gap will attempt to fill. It usually begins to do so within the initial 15 minutes of the day, often directly out of the opening bell. When the 15 minute highs hold, however, and the market is setting up a pattern on a larger daily time frame, such as on February 29th, then there is a greater chance that the gap will not fill. Since the markets were already selling off for over a day and a half by the time Friday's gap took place, and had been increasing momentum on the downside into the prior day's close, it made it easy for the gap to exhaust the market and allow it to hold the opening lows.

When a large gap in the indices attempts to fill out of the open, it tends to do so rather swiftly, often completing the closure of the gap with the 10:45 ET or 11:00 ET correction periods. The 5 minute 20 period simple moving average served as an initial resistance level coming off the opening rally, hitting at approximately the same time as the morning gap closed. The market stalled there for 15 minutes before breaking through the highs, continuing to the 15 minute 20 period simple moving average resistance level, as well as price resistance from Thursday's mid-day congestion.

The 15 minute resistance hit at the same time as the 10:45 ET correction period. Even though the volume was decent on the upside initially, the second wave of buying on the 5 minute time frame into that larger resistance was on lighter volume. Not only that, but the momentum also declined on the continuation move into that 15 minute 20 sma. These traits, combined with the resistance levels hitting at the same time as the correction period made it very easy for the market to roll over.

The downside was strong off intraday highs. I immediately began to watch for continuation moves for lower late morning lows. At the very least, the morning's action, combined with the weak daily charts, would push the indices into a wider range on the 30 minute time frame and test the zone of the opening lows. The continuation patterns on this late morning drop did not take long to form, correcting only about 15 minute between each drop before finally testing the opening price level in the indices between 12-12:30 ET.

If the market was going to hold the range, the mid-day lows should have held well, leading to a bounce into the early afternoon. Although the momentum attempted to increase on the upside into the 5 minute 20 sma, the volume remained light and the 5 minute 20 sma held as resistance. Instead of hugging that resistance level to break higher, the indices slid down it, finally letting go just after 13:00 ET to move last mid-day lows and back into the morning lows. The momentum continued to shift back in favor of the bears with a short-lived move back into the 5 minute 20 sma before the indices broke more strongly to new lows on the day heading into 14:00 ET.

Although not as choppy as Thursday's selling, the overall downside on Friday was not at all extreme. There was a lot of overlap in prices from one bar to the next and it didn't form the preferred bear flags and breakdown patterns to easily satisfy the bears. CME data problems didn't help matters and the chop left the door open to allow a late day rally to easily take over.

The market began to hint at a late day reversal a few minutes past 14:30 ET. The third wave of afternoon selling on the 5 minute patterns broke higher at that point and about 15 minute later the larger 15 minute downtrend channel also broke. This larger break attracted the bulls who had been waiting throughout the day for such an opportunity. The slower, choppy downside left the intraday bears tripping over each other to get out and the market jumped higher, all the way back to the highs of the mid-day rally attempt. It held as the market congested into the closing bell.

Despite the late-day recovery, the Dow Jones Ind. Ave. ($DJI) still closed lower by 146.70 points, or 1.2%, at 11,893. It lost 2.8% over the course of the week. The S&P 500 ($SPX) fell 10.97 points, or 0.8%, and closed at 1,293.37 for a loss of 2.8% on the week. The Nasdaq Composite shed 8.01 points, or 0.4%. It closed at 2,212.49, down 2.6% on the week.

Last week's action failed to really excite the bears, who would have preferred a stronger breakdown pattern instead of the slippery drop which took place. At the same time, the economic data and other financial news continues to weigh heavily on the bulls and the technicals continue to point to further downside to come. The makes it very difficult for short-term players since we are not likely to see an easy move lower without another range or daily correction lasting a week or two, but upside moves are not likely to last long. I didn't have much luck when scanning for new longer term positions over the weekend and all the potential swingtrades I located are on the short side, but need more ideal intraday activity. As a result, I'll be focusing primarily on intraday price moves into the early part of the week with few overnight holds.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Live Trading Room

Question:

Hi Toni, Where are the directions to enter your daily chat room? Thanks!

Answer:

Hi! The link to my live trading room is http://www.tradingfrommainstreet.com/roomsetup.html. You can also use http://www.icechat.net/ to access the room for free without the mIRC registration.

Please note that this is a social forum. I trade at all hours of the day and night, so I am not always in the room personally since my schedule does not give me the time to manage a room full time anymore. I do post market commentary and my trades during the times I am in and a number of traders actively participate in scanning, locating trade ideas and general market chit-chat throughout the day, so please feel free to stop by and hang out anytime.

The room is completely free of charge, although I would like to ask you to please help support it via my Trader's Library affiliated bookstore located at http://www.invest-store.com/tradingfrommainstreet/. Prices there often beat out those on Amazon and through my affiliate you have access to many special offers and discounts. To check out this month's current specials, please go to http://www.invest-store.com/tradingfrommainstreet/currentspecial.html%20.

While participating in my trading room please observe the following rules/guidelines:

1) Clean family-style fun only… i.e. no cursing (or mock cursing), excessive/undeserved trouting (deserved trouting still approved)

2) Everyone knows how difficult trading can be at times, so let’s keep all posts positive and encouraging… discussing difficult issues with trading is encouraged, but avoid unconstructive complaining

3) Only post stocks and setups which are similar to those you see posted by Toni (mwah). This way even newbies will be able to catch on easier to the style traded here.

4) If watching a security for a trade, post the symbol ahead of time when possible, as well as buy/short and the general type of trade, i.e. breakout, 2t, etc. There will be times we will post missed setups though in order to expand our familiarity with certain patterns and learn from them.

5) For stocks which fit the criteria of the room’s style of trading, you are welcome to post these in purple to make it easier to follow the setups and pick them out from the rest of the chat dialogue. You can do this by typing for example “/me watching XYZ.” (without the quotations), which will post “watching XYZ.” in purple as an action. I will use similar commands on the setups I am watching as well.

6) I, or my associates, will often pop in to answer questions, tell stories, teach, etc. You are also welcome to relate market-related material, however, all such activity is restricted during the first 45 minutes of the session. During that time, please keep the focus solely upon current trade activity and ideas.

7) Absolutely no solicitation or posting of services from market vendors such as for-fee chatrooms, newsletters, etc.

8) In consideration of copyright lawsy, cross-posting from other for-fee services is not allowed.

Thanks and I'll see you there!
Toni

Market Staggers Lower Throughout Thursday's Trade

Good day! The market ended the day lower once again on Thursday with more downside than I had been expecting following Wednesday's close. The market had actually managed to return back to Wednesday's intraday highs in the afterhours trading in the index futures, but a strong reversal pattern into midnight led to a steady downtrend in the premarket during the wee hours of the morning. This led to a slightly lower open in the S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI), but the Nasdaq Composite ($COMPX) was relatively unchanged.

Ahead of the open the Labor Department reported its current jobless claims data. Initial filings for state unemployment benefits fell to the lowest levels since January 19th last week, falling 24,000 to 351,000. Continuing claims, however, climbed by 29,000 to 2.83 million in the week ending in Feb. 23rd. This marks the highest level since Sept. 24, 2005. This news, while certainly not at all promising for the economy, had very little immediate impact.

The market was not able to hold up for very long, however, past the opening bell. The opening price action left the indices vulnerable to a breakdown from the 15 minute trend channel, which was now more gradual on the upside on the intraday charts. This created a 15 minute Avalanche pattern into Thursday morning. The first wave of intraday downside came at about 10:00 am ET when the pending homes sales data came out.

Continued negative news from the housing front weighed heavily on the market on Thursday. Mortgage Banks Association reported record foreclosure levels in the fourth quarter of 2007, hitting the highest levels since the history of its survey. Loans which were delinquent, but not yet in foreclosure, tested levels not seen since 1985. Tied to the housing market was data from the Federal Reserve, which reported that the net worth of U.S. households fell by $533 billion at an annual rate of 3.6% last quarter.

Merrill Lynch (MER) fell 7% on Thursday after it reported that it was raising the conversation of some of the securities it sells. This came shortly on the heels of its announcement to get out of the subprime lending business. Ambac (ABK) also broke strongly lower on the daily time frame after Wednesday's announcement to sell $1.5 billion in stock in order to try to hold onto its AAA rating. It lost another 14.7% on Thursday.

After heading lower into 10:00 am ET, the market managed to bounce back a little bit. The 5 minute 20 sma in the S&Ps and Dow held as resistance, while the stronger Nasdaq retested the morning highs before it once again continued lower. The session as a whole was a very choppy one for the market. It stair-stepped lower throughout the day with each upside move on light volume and greater chop than each of the downside moves. The upside also took longer and nearly reclaimed of the previous move's losses before turning lower once again. The Nasdaq led the decline, but all off the indices plunged into the close, returning to the support from Tuesday's lows into the bell.

The Dow ended the session lower by 214.60 points, or 1.7%. It closed at 12,026. The financials were particular hard-hit. In addition to Merrill's losses, J.P Morgan (JPM) fell 2.5%, while Citigroup (C) fell 4.4%. All but one of the Dow's 30 components closed in negative territory. The S&P 500 lose even more than the Dow, dropping 29.36 points, or 2.2%, to close at 1,304, while the Nasdaq Composite fell 52.31 points, or 2.3%. It closed at 2,220. On the NYSE declining stocks outpaced advancers by 4:1, while they were nearly 5:1 on the Nasdaq.

Despite the weakness on Thursday, I am still favoring a range on the 60 minute into next week. Even on slightly lower lower, it would be easy to pull back up into the prices of the past couple of days. Congestion in these levels would then allow for a stronger break of the support. Either way though, the bias in the market on the daily time frame remains bearish, so I'll be looking at upside moves from a short term perspective only.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Crude Oil and Gold Hit New Record Highs

Good day! Volume was decent in Wednesday's session, but trade was choppy throughout. We experienced the continued correction off Tuesday's lows with wider 30 minute swings as anticipated. After gapping higher into the open and continuing higher for the first 45 minutes of the day, however, the market corrected from this intraday move by falling into a sustained trading range until the first half of the afternoon. The Nasdaq Composite hit my resistance target of 2,290 almost perfectly with a high of 2,290.01.

Early in the day, the Institute for Supply Management reported that nonmanufacturing sectors of the U.S. economy contracted at a slower pace in February. The index rose to 49.3 off 44.6 the month before, beating expectations. In other news, nonfarm payrolls grew by 2,000, compared to the 20,000 forecasted, productivity rose at a 1.9% annual rate last quarter, unit labor costs rose 2.6%, and the Commerce Department reported a 2.5% decline in factory orders.

I found it a bit more difficult than usual to locate decent intraday setups. Most of them I located in the late morning and into the early afternoon were in securities which were rounding off at morning highs, creating momentum reversal patterns that favored downside into the early afternoon. This left me more bearish as mid-day progressed, despite the base at highs in the indices.

The large, extended intraday move on the 15 minute time frame, beginning Tuesday afternoon and lasting into 10:15 ET on Wednesday morning, also made it necessary for the market to correct for at least a day to a day and a half before it would have rested long enough to sustain another strong momentum move on that time frame. Although the market attempted to pop higher into noon, it immediately whipped back into the range off the 20 day simple moving averages in the S&P 500, Dow Jones Ind. Ave., and Nasdaq 100 EMinis. The complete lack of confirmation and failure of the market to hold support in the middle of the intraday range increased favor for an early afternoon breakdown.

The breakdown into the second half of the session was confirmed when the market formed a strong 5 minute Avalanche pattern by pulling up off the lower end of the trading range, but holding the mid-day point of the range. Since the volume dropped despite the upside movement, it was easy for the indices to hold the 5 minute 20 sma resistance, and shortly after 13:00 ET the Avalanche triggered.

The 5 minute Avalanche gave way to the strongest move of the entire session. The indices plunged through their 15 minute 20 period simple moving averages, hit morning lows and gap closure support levels, and continued strongly until just a few minutes past 13:30 ET. At this point the indices had made it all the way back into late-day support from Tuesday afternoon, retracing to the 62% Fib level in the S&Ps and Dow and a more modest 50% in the Nasdaq. Fibonacci levels hold exceptionally well in the indices and are a great tool for adding a bit of additional visual clues to your charting.

The extreme downside momentum of the early afternoon descent meant that the market would favor a trading range throughout the remainder of the session on a 30-60 minute time frame. This increased the risk once again since it tends to indicate a more choppy trading environment to come.

Upon hitting support, the market bounced quickly back into the 5 minute 20 period sma as first resistance, holding there for about 20-25 minutes. By hugging that resistance level, it increased the odds that it would break through it to retest the early morning range, but it broke a bit earlier than was desired. The result was a more minor break of the resistance than would have been likely had it held the 20 sma for another 15 minute or so. Instead the market had to pull back into that support level to compensate for the early attempt and the continuation pattern followed through into the close and into afterhours trading. It made it well into that early morning range, but by that point the bell had already rang, so it didn't do intraday traders a great deal of good by that point.

The Dow Jones Industrial Average ($DJI) gained 41.19 points, or +0.3%, on Wednesday and closed at 12,254.99. 18 of the 30 Dow stocks closed higher with Chevron Corp. (CVX) leading the gainers. It closed higher by 2.5%. The S&P 500 gained 6.95 points. It closed at 1,333.70. The Nasdaq Composite rose 12.53 points, or +0.6%. It closed at 2,272.81.

Once again topping news wires, Ambac Financial (ABK) suffered a hit after it halted trading on news that the company would sell $1.5 billion in stock and equity in order to hold onto its AAA rating. It lost nearly all of the prior day's gains, closing lower by 18.8%. In other news, on the New York Mercantile Exchange crude futures rose 5% to hit a record close at $104.52/barrel. Gold futures also made new record highs. They closed at $988.50/ounce, up $22.60.

As the week progresses I am continuing to expect the lows made on Tuesday to hold. The 12,280 zone remains Dow resistance. 2,310 is the next Nasdaq resistance. A trading range on the 60 minute time frame, back and forth within Wednesday's range is quite likely, followed by a stronger trend on Friday as long as we do see that range hold Thursday.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Makes a Come-back

Good day! The market experienced some very nice trends on Tuesday, following through very well with our expectations once again heading into the day. It gave us a nice downside move initially, followed by the strong late day reversal we had been expecting. Although the Dow Jones Ind. Ave. ($DJI) was down more than 200 points intraday, by the closing bell it had recouped all by 45.10 points of that loss, or -0.4%. The Dow closed at 12,213.80. The S&P 500 ($SPX) lost 4.59 points on the day, or 0.3%. It closed at 1,326.75. The Nasdaq Composite ($COMPX) did so well on its late day recovery that it managed a tiny gain of 1.68 point and closed at 2,260.28.

After gapping lower into the open on Tuesday, the indices fell into a very choppy and narrow range. Little happened throughout the first hour of trading, but the 15 minute 20 sma served as resistance, and as soon as it hit the market began to move lower once again. This was the strongest downside of the day, taking the indices to new intraday lows and past Monday's lows. The selling continued into the 11:00 ET reversal period, but when that hit the buyers did not emerge right away. Instead, the volume remained light as the market slowly pulled into the 5 minute 20 sma, congested, and broke higher for a second wave of correction before heading lower into 13:00 ET.

The early to mid-afternoon action in the m