Market Gives Back Gains Following Quarter-Point Fed Rate Cut

Good day! A typical Fed day begins with upside in the morning. On Wednesday the market held that bias quite well. After a slight gap higher, the indices formed a two-wave continuation pattern along the highs on the 5 and 15 minute time frames. They began the previous afternoon at highs on the intraday time frame and at 8:30 am ET on the all sessions time frame, so the pattern formed on several levels. I drew the 15 minute ES setup on the chart below.

The Commerce Department released the first quarter gross domestic product data ahead of the open on Wednesday. First quarter estimates came in with a 0.6% growth, larger than the 0.2% anticipated. The number was a bit deceptive, however, because 0.8% was attributed to inventory building and final sales of domestic product fell 0.2% with final domestic sales falling 0.4%. This was the first decline since the 1991 recession.

In other news, Procter & Gamble (PG) and GM (GM) both posted better-than-expected earnings. This helped set the tone for the Dow, which would end up leading the market higher throughout the morning. The early buy pattern in the indices triggered at 10:30 ET. The S&P 500 lagged ($SPX), but it also broke higher out of the 11:00 ET correction period while the Nasdaq Composite ($COMPX) and Dow Jones Industrial Average ($DJI) each formed continuation patterns at that time.

Once the Nasdaq broke, it moved steadily into new intraday highs, thus making new highs on the month as well. The Dow used its late morning strength to propel it back into Monday's highs. This served as a solid price resistance level in the indices and it hit at the same time as the 11:15 ET correction period, helping to trigger a pullback into the early afternoon.

Volume began to decline sharply following the late morning reversal. Many market participants began to take to the sidelines ahead of the afternoon Fed announcement. The mid-day correction was fairly gradual overall, first leading to a pullback into the 5 minute 20 period simple moving average, followed by an avalanche on the 5 minute time frame at 12:00 ET that created a second wave of selling into the early afternoon. Corrective moves within a larger trend often take the form of two waves, so this created a buy setup into the 13:00 ET correction period, but the market was not too enthusiastic given the looming interest rate news.

The market fell into a trading range on the 15 minute time frame with the 15 minute 20 sma as support until 14:15 ET. The Fed once again lower the interest rates, cutting it by another quarter-point to 2%. This was what the market had been expecting, although there was speculation that they would pause rate cuts for the time being. This speculation helped create a bit of a relief rally immediately following the announcement, but as soon as the news settled the bottom began to give way. The old "buy the rumor, sell the news" adage comes to mind.

The Dow had shot back into the 13,000 price resistance level immediately after the rate cut was announced, but this price level merely served as resistance. The S&Ps were also hitting Monday's highs immediately following the news and this resistance level provided another reason for the buyers to start to hold off. A bearish triangle quickly formed on the 2 minute time frame along the 5 minute 20 sma. It triggered at about 14:45 ET and as soon as the lower channel gave way the bears returned with a vengeance.

As I warned throughout the week to date, whenever the market creeps higher, such as it has done over the past two weeks and as it did on the 15 minute time frame coming off Tuesday's lows, the odds are quite high that the downside will be extreme once the channel gives way. The 15 minute channel did so with almost no hesitation, quickly plunging the indices back to Tuesday's lows and their 15 minute 200 period simple moving averages. The weaker S&Ps managed to break through these support levels a bit, but the Dow and Nasdaq held them quite well and these price levels stalled the descent at about 15:10 ET. The market did attempt to breakdown once again into the close, but the move did not have much time to follow through and did not go too much further immediately after the closing bell either.

The Dow ended the session on Wednesday at 12,820.13, down 11.81 points, or 0.1%. 16 of its 30 components posted losses on the day with Citigroup (C) (-3.99%) and Hewlett Packard (HPQ) (-3.11%) leading those losses. On the month as a whole, however, the Dow gained 4.5%. The S&P 500 ($SPX) fell 5.35 points, or 0.4%, and closed at 1,385.59. This brought its monthly gains to 4.8%. The Nasdaq Composite ($COMPX) lost 13.30 points, or 0.5%, on Wednesday and closed at 2,412.80 for a 5.9% gain in April.

Although the post-Fed drop took the indices through their 15 minute channel lows very quickly, the daily channel remains in place. The market tested the lows of that channel on the late-day decline, as shown on my charts below. It still remains very easy for the same type of action which took place intraday on the 15 minute charts to now form on the daily time frame. As a result, I am very cautious on any plays on the long side at this time and will be favoring shorts. It would not take much for the 20 day sma to break to the downside.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080430

Trade Wrapup - 20080430

10:28 YM (12873) and ES (1395) forming 5 min "D" patterns which begin at 15:00 yesterday
Breakout Template: For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
also at about 8:30 am this mornign all sessions charts
NQ also (1945.50)
10:33 NQ triggered... good start... YM also moving well
10:38 first resistance showing (1948.5 NQ, 1396.25 ES, 12887 YM)
10:45 futs reacting here to that first resistance levels... congestion
10:54 futs second resistance hitting (1950.5 NQ, 1396.75 ES, 12905 YM)
11:02 YM is certainly the leader on this "d" cont pattern. it is coming into price resistance from the 28th with that congestion at highs
11:05 (1950.5 NQ, 1397.25 ES, 12915 YM)

10:30 GPRO still basing (at highs from previous session)

10:30 Fed today so expect even slower action into early afternoon

11:12 RESISTANCE coming into 11:15 correction period

11:44 RAI is basing at lows.... not too fond of the slightly lower lowe in the base.. that is a con - 54.24-54.44 entries, 53.25 target
12:28 want rai to hold 5 min 20 sma resitance which iw about 54.42
12:43 RAI is testing the 5 min 20 sma... need to see it hold
14:23 was not brave enough to hold bmrn and rai through the fed but both actually holding the pattern still and rai making new lows.. could have easily re-entered... i missed it though just now
14:46 first support here on RAI' - note: "managed to get some RAI short at 54.97 at 14:37 ET.. just protected part at 53.54... looking for 53 rest... 5 min 20 sma is resistance"
15:15 53.93 RAI trailing stop

11:51 BMRN base at highs 36.50-36.60 entries, 37 initial target
14:23 was not brave enough to hold bmrn and rai through the fed but both actually holding the pattern still and rai making new lows.. could have easily re-entered... i missed it though just now
14:29 BMRN i'd go ahead and exit if not already done so ahead of the fed.. forming 5 min avalanche (36.35)

12:04 RESISTANCE YM is hitting prior highs on the 5 min here

Jacob : Toni, I hope you don't mind my asking a question. Is your "D" pattern mentioned this morning the same thing as your "2B" from your Pattern Reference Guide?
Toni : no.... the D can be found on this template:
http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
a D setup can have a 2B in it though. if the second low is slightly lower than the first and its a reversal pattern off lows, but it is also a continuation pattern. essentially its a two-wave pullback pattern

11:55 hmm.. i may be done until after the fed... not finding much
12:18 risk is going to remain higher on anything into the fed

12:30 SUPPORT this is 15 min 20 sma on the es and nq
13:10 this is some initial resistance on the bounce off that 15 min 20 sma zone

14:14 RESISTANCE ES hitting monday highs

14:26 SUPPORT ES and NQ both pulled back to the 30 min 20 sma levels off that resistance and these are serving as support

15:15 SUPPORT: this is NQ 29th lows as support btw

Market Holds Trading Channel

Good day! As discussed in my last several columns, the market has been in a choppy trading channel on the daily time frame since the 18th. I had been expecting the market to continue to hold that channel at the beginning of this week and so far the market has obliged. On Monday the indices had tested the upper end of that channel on light volume and with slowing momentum. This allowed the indices to break lower into the close. The pattern was large enough on the 15 minute time frame that it was also able to continue into Tuesday morning, bringing the market back to the lower end of that larger channel within the first 90 minutes of trade.

Although Tuesday's session began with the weaker bias thanks to the 15 minute reversal pattern which had triggered the prior afternoon, the selling did not increase again until the Conference Board released its April consumer confidence reading. The consumer confidence index fell from an upwardly revised 65.9 in March to 62.3 in April, which is its lowest level since March 2003. It was higher than the 61.0 expected, but it was not enough to hold up the the market and a second wave of selling began immediately.

In other news on Tuesday, U.S. home prices continued to fall, down 2.6% from January according to the Case-Shiller home price index measuring 20 key cities. This means that for the past year home prices have fallen a record 12.7%. Prices are expected to continue to decline with the largest losses in Las Vegas and Miami, both of which have fallen by more than 20% in the past year.

Following the morning's economic data, the downside continued in the market until the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) both hit their 15 minute 200 period simple moving averages at the same time as the 10:45 ET correction period. The Nasdaq Composite ($COMPX) found support a bit sooner at the opening lows at 10:30 ET. The reaction off these support levels was decent, but not extreme. The Nasdaq experienced the strongest reaction, popping quickly to the 5 minute 20 sma. The greater strength throughout the morning, as well as this earlier and stronger move off support, made it easier for the Nasdaq to show the greatest strength throughout the afternoon as well.

After the initial move off support took place, hitting highs around 11:30 ET, the market began to pull back once again. This time, however, the momentum was very gradual and volume dropped on the pullback, creating a nice 5 minute buy setup that triggered early on in the afternoon. A continuation of this setup took place out of the 13:00 ET correction period and took the indices through their 15 minute 20 sma resistance levels. The Nasdaq also used this breakout to move to new highs on the day. It rallied all the way back into the zone of Monday's highs.

The market stalled once again shortly after 13:30 ET, but the correction was once again a mild one. The 5 minute 20 sma held as support, as did the lower trend channel, and at 14:30 a final wave of buying took place, bringing the S&Ps and Dow back into Monday's close as price resistance. This hit with the 15:00 ET correction period. I had been watching for a final move higher into the close, but the market rounded off at highs before pulling back and nullified that possibility. Although the 5 minute 20 sma and lower trend channel stalled the move on the downside at 15:30 ET, the roll over off highs made it easy for the support to break and the market to continued lower into the close and afterhours trade.

Both the ES (S&P 500 Emini futures) and YM (mini-Dow futures) were able to return to the zone of the intraday lows at about 16:15 ET, although the Nasdaq still managed to hold up well and only retraced to the 38% fibonacci level. The upside was then able to resume and the indices futures performed well into the late evening hours.

At the closing bell, the Dow had fallen 39.81 points, or 0.3%. It ended the day at 12,831. The S&P 500 lost 5.43 points intraday, or 0.4%, and closed at 1,390. The Nasdaq Composite gained 1.7 points, or 0.1%, and closed at 2,426. Top sectors included airlines, telecommunications, health care, and technology. Sectors performing poorly on Tuesday included gold, oil, pharmaceuticals, and natural gas.

Several big-name companies reported earnings ahead of the open on Tuesday, but they had very little impact on the market as a whole as the session began. MasterCard (MA) more than doubled its profits, reporting a 29% increase in revenue. It gapped sharply higher to break the upper trend line of its daily uptrend channel and closed higher by 13% (+$31.48). Corning Inc. (GLW) also rallied into Monday's open after it tripled its first-quarter profit on LCD sales. It pulled back off highs about 35 minutes into the session, but still gained 3.3% (+$0.85) on the day. BP (BP) has also been on a run lately with oil hitting highs and it jumped another 4.6% (+$3.20) on Monday after it beat analyst estimates.

Offsetting the gains made by the likes of MA, GLW, and BP was the rejection of Merck's (MRK) cholesterol drug Cordaptive by the Food and Drug Administration. MRK has been suffering a sharp decline since the beginning of the year and it took a hit with another 10.4% (-$4.30) loss by the end of the trading day on Monday after trying to find a foothold over the past month at lows.

Wednesday's session brings with it another Fed rates announcement. Expectations are for another quarter-point rate cut. Odds are beginning to increase that the Fed will pause its rate cut trend into the summer. There is some speculation that they will begin to do so on Wednesday, but overall most anticipate this to begin with the next meeting instead.

With any Fed day, however, the market tends to begin the session with an upside bias intraday and then a slowdown over noon and into the rate announcement. Then the market will experience several reactive waves, typically in groups of three with an initial reaction, followed by a counter-reaction, and then continuation of the initial move. Use a great deal of caution in pre-Fed and immediate post-Fed trade. The market is still in the trading channel it has been stuck in for the past two weeks. I am favoring a sharp breakdown once the channel gives way, but it can still hold for a few more days if there is not an extreme negative reaction to the Fed.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080428-29

20080428 - I was out of the office on Monday, so hence there were no trades or commentary for this day.

20080429 - Trade/Commentary Wrapup

11:28 NQ resistance here at prior highs (1931)
11:57 NQ first support coming off that pivot high (1927)
12:10 second support NQ (1925.25) "this is for the reversal off highs, not a buy"
12:18 "covering last of NQ" (1924.5 .. 1923.25 was low)

NQ Correction off highs


11:52 CF base at lows ($138.80) 5 min.
11:54 Mykonos : CF dying
12:13 CF 131 is initial target (hit 131.05 shortly thereafter)
12:14 hitting target zone
13:17 trailing stop hit on rest of CF (lows 130.52)

CF Short Setup


13:00 FLS watch for 5 min bull flags this afternoon
14:20 FLS off watch

FLS Desired Buy Setup - No trigger


15:03 GPRO base at highs 15 min on daily channel breakout looking to close feb gap
15:50 gonna watch that GPRO for tomorrow.... see if we can get a morning play on it

GPRO Buy Setup - Not yet triggered... watching for Wed. morning


15:05 YM hit yesterdays closing prices and serving as resistance on the 5 min

YM Resistance for correction


15:06 looking at 5 and 15 min indices for chance at another push higher before the close for a bull flag
15:06 the 5 and 15 min 20 sma is the support for a flag - nas will have the hardest time - has the greatest extension already
15:21 got rounded highs a bit here on the futs... that is not what i wanted to see for a flag

Market Pushes Higher on Light Volume

Good day! Trading was quite slow on Monday. Volume was light and the indices were stuck in a narrow uptrend channel throughout most of the session, creeping higher without any strong overall bias. We had been expecting the daily channel to hold early this week and Monday's session did not disappoint in that regard.

The week began relatively unchanged from Friday's closing levels. A bullish range formed out of the open with a slow retracement to the 5 minute 20 period simple moving average, but the market was unable to get going when the range attempted to break higher at 10:10 ET. Volume remained light for morning trade and the indices appeared glued to their 5 minute 20 period smas.

When the 11:00 ET correction prior hit the market attempted to break the support. This move also lacked conviction, however, and the morning congestion held. Momentum failed to shift to any significant degree and, although the indices returned to highs and even pushed through them into the early afternoon, they failed to to confirm any larger directional bias. The 5 minute 20 sma again became support and the market slowly crawled higher into 14:00 ET.

At 14:00 ET the indices hit their first substantial intraday resistance when the Dow tested the zone of last Thursday's highs. This corresponded to that 14:00 ET correction period and the market attempted another correction off the upper end of the day's trend channel. Although the downside momentum increased somewhat, it was even more nominal than the 11:00 ET pullback and found support at the 15 minute 20 sma.

This 15 minute 20 sma level had been keeping pace with the prices action since late morning and prevented the market from quickly breaking lower into the final two hours of trade. It was not enough, however, to prevent a larger correction from taking place. Whenever the indices creep higher the risk is also high that once support gives way it can do so rather quickly. Although the 15 minute 20 sma held at first, the indices congested along that level and at 15:15 ET the market broke down. In the final 45 minutes of trade the indices displayed the strongest momentum of the session, taking the market back to the lower end of the day's range with the S&Ps leading the selloff. The 5 minute 200 sma served as support just prior to the closing bell.

The Dow Jones Industrial Average ($DJI) fell 20.11 points on Monday, or 0.2%, and closed at 12,871 with 17 of its 30 components lower. The S&P 500 ($SPX) also lost ground, falling 1.47 points, or 0.1%, to 1,396. The Nasdaq Composite gained 1.47 points. It closed at 2,424.

Leading the news on Monday was an announcement by privately held Mars, Inc. to buy Wrigley Jr. (WWY) for $80/share. The purchase is to be backed by Warren Buffett's company, Berkshire Hathaway Inc. (BRK.A/BRK.B). WWY had closed on Friday at $62.45/share. The purchase price is based upon four times sales and 35 times WWY's 2007 earnings per share. Wrigley will become a subsidiary of Mars with Berkshire Hathaway making a minority investment. Additional financing will be provided by Goldman Sachs (GS) and J.P. Morgan (JPM).

Ford Motor Co. (F) was also making headlines on Monday. F has been in a strong uptrend since mid-March. The stock pushed past $8.50 on the 24th after it reported earnings for the quarter of $100 million, or 5 cents a share. It blew away estimates, gapping higher and continuing to run throughout the morning. Although it pulled back following this exhaustion move into the weekend, it jumped higher once again on Monday when Kirk Kerkorian's Tracinda announced that it planned to offer $8.50/share for up to 20 million of Ford's shares.

The focus over the next two days will be on the Fed. on Wednesday it will be announcing its latest rate decision. While many expect them to lower rates by another quarter of a point, it is quite possible that they choose to halt the rate cuts at this point. My stance on the market's outlook this week has not changed. I continue to expect back and forth action with a slight bullish bias pacing higher with the 20 day sma. This will leave the market vulnerable for a more rapid breakdown when the next daily correction off highs gets under way.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Heavy Earnings News and Economic Data to Influence This Week's Trade

Good day! The market is going to be heavily influenced by another week packed full of earnings reports as well as some very hefty economic data. Stocks to watch on Monday include Verizon (VZ), which is expected to report first-quarter earnings of $0.62/share; Humana Inc. (HUM), which expected to report Q1 earnings of $0.48/share; and Tyson Inc. (TSN), which is expected to report a fiscal Q2 profit of $0.02/share. Visa (V) also reports on Monday and expected to report earnings of $0.45/share for fiscal Q2. ADM, BP, BNI, CFC, ODP, X, and VLO are top names which report on Tuesday.

The most notable event on the economic front will be Wednesday's Fed interest rate decision. It is anticipated by many that the Fed will once again lower interest rates, this time by a quarter percentage point to 2%, although there is no strong consensus that the the Fed will in fact make another cut at this time. Speculation is increasing that the Fed will hold off on further cuts for the time being as a result of the rather worrisome increase in the price of food, energy, and commodities. The continued decline in the value of the dollar is also widely cited as a reason for the Fed to halt rate cuts.

Early in the day on Wednesday, the Commerce Department will be releasing the first estimates for the first-quarter gross domestic product. Economists as a whole are expecting very little change in the overall numbers for this past quarter, with perhaps an exception in terms of some growth in exports and declines in residential and business investment.

On Thursday the Institute for Supply Management will be reporting its latest index reading. The monthly ISM index report is a national survey of the manufacturing sector which examines new orders, production, employment, deliveries, and inventories, and is one of the widely watched economic indicators. Overall, a reading over 50% indicates expansion, whereas a reading under 50% indicates contraction in the manufacturing sector. A reading in the low 40s tends to correspond to periods of recession. The ISM index for April is expected to drop to 48.0%, as compared to 48.6% in March. Since exports factor into the monthly reading, they will likely assist in holding that number above the low 40s for the time being.

The week will end with the latest unemployment data. During a recession, payrolls fall and unemployment levels rise. April marked the fourth month in a row that payrolls have declined. Job losses are expected to be most prevalent in manufacturing, construction, financials, and retail. Once again, strong exports are expected to inflate the numbers. The unemployment rate for April is expected to increase only slightly from 5.1% to 5.2%.

Going into Friday session I had been anticipating another day of back and forth activity without a strong intraday trend. Given the failed early upside breakout attempt the day before, I was particularly leery on the side of the bulls. The day began with very little difference between Thursday's closing and Friday's opening price levels in the major indices. Within the initial 15 minutes of trade the market held those levels. As the 9:15 ET correction period hit, however, the bears again regained control, continuing the selloff pattern which had began late in the prior session. This selloff continued into 10:00 ET.

At 10:00 ET the University of Michigan released its U.S. Consumer Sentiment index. It is currently at its lowest levels since 1982, falling from 69.5 in March to 62.6 in April. The data was no worse than had been expected. From 10:00 to 10:30 ET the indices corrected somewhat off their early morning lows. The 5 minute 20 period simple moving average served as resistance, but a 30 minute correction following 30 minutes of selling is typically not quite enough time to allow for the market catch its breath. The previous lows held as support and the indices fell into a base along those lows into the 11:00 ET correction period.

The downside continued at 11:00 ET, taking the indices to new intraday lows. This late morning breakdown brought them into the range from earlier in the week. I had been looking at the lower end of that range as support. The Nasdaq did make it back into the lower end of the range from Wednesday into Thursday morning, but the other indices held mid-range. The S&Ps had hit equal move support at that time on the morning's continuation when compared to the previous afternoon. This is a rather significant form of price support and the market was able to bounce off this level and back into the 5 minute 20 sma.

The shallower price retracement aided in the formation of a stronger late day reversal. It began with a large shift in momentum mid-day. The indices congested along the 5 minute 20 sma zone for two hours. The Nasdaq formed a double bottom on the 15 minute time frame and the market took off as the 14:00 ET correction period hit. This is a very common time of the day for major market moves to begin as well as end. The upside built on itself throughout the remainder of the afternoon with the Russell 2000 ($RUT) leading. The S&Ps and Dow followed, but the Nasdaq lagged.

The Russell 2k and S&P 5000 were able to make new highs on the session in the final hour of trade. The Dow Jones Ind. Ave. ($DJI) hit resistance at the morning highs with about 40 minutes of trade left. At this time the S&Ps had also ran into resistance at Thursday's highs and the Nasdaq Composite ($COMPX) was testing its open. All of these resistance zones hitting at once put a damper on the bullish sentiment and the buying stalled with the afternoon highs holding into the close.

The Dow ended the week higher by 0.4%. On Friday it gained 42.91 points, or 0.3%, and closed at 12,891.86. American Express Co. (AXP) was one of the top gainers after it reported a first-quarter loss that was less than had been anticipated. The S&P 500 closed higher on the week by 0.5%. It had been in negative territory, but the 9.02 point gain on Friday added 0.7%. It closed at 1,397.84. The Nasdaq Composite gained 0.8% on the week as a whole, but it closed lower on Friday by 0.2%, or 5.99 points, at 2,422.93. Leading sectors on Friday included energy, broker/dealers, and banking, while technology stocks led the decliners.

I think that we can continue to see the market step higher early this week. I expect that there will still be a great deal of overlap in price from one day to the next without the indices adding much difference between the current price levels and the 20 day sma. This is about 35-40 points on average in the Nasdaq and about 120 points in the Dow. A market which creeps higher can turn very quickly, so this is something that should be kept in mind given this scenario.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic Reports and Earnings Events This Week : Apr. 25 - May 2

Economic Reports and Events This Week

Monday, April 28, 2008
10:30a.m. Apr Dallas Fed Mfg Production Index. Previous: 13.6.

Tuesday, April 29, 2008
7:45a.m. ICSC Chain Store Sales Index.
8:55a.m. Redbook Retail Sales Index.
10:00a.m. Apr Conference Board Consumer Confidence. Previous: 64.5.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, April 30, 2008
8:30a.m. 1Q Advance GDP. Previous: +0.6%.
8:30a.m. 1Q Employment Cost Index. Previous: +0.8%.
9:45a.m. Apr Chicago PMI. Previous: 48.2.
10:30a.m. Crude Inventories
2:15p.m FOMX Policy Statement

Thursday, May 1, 2008
8:30a.m. Initial Jobless Claims For Apr 26 Week.
8:30a.m. Mar Personal Income. Previous: +0.5%.
8:30a.m. Mar Personal Spending. Previous: +0.1%.
10:00a.m. Apr ISM Manufacturing Business Index. Previous: 48.6.
10:00a.m. Mar Construction Spending. Previous: -0.3%.
10:00a.m. DJ-BTMU Business Barometer For Apr 12.

Friday, May 2, 2008
8:30a.m. Apr Nonfarm Payrolls. Previous: -80K.
8:30a.m. Apr Unemployment Rate. Previous: 5.1%.
10:00a.m. Mar Factory Orders. Previous: -1.3%.


Key Earnings Announcements This Week:

Monday, April 28, 2008
Before: ACV, ARLP (?), BEAV, BWP, CG, CNA, CORS (?), COT, DCO, DEP, ENDP (?), EPD, FSNM, HUM, IHP, KDN, LTR, MGLN (?), MAG, MC, MOG.A (?), NTY (?), ONB, PVTB, RSH (?), RDWR, SSW, SOHU, SYY, TSN, VZ, V, WWY
After: ACTS, ACTU, AATI, ALGT, AMCS (?), NLY (?), ATHR, AXS, BLDP, BKHM, CHH, CGNX, CVD, DGII, EDR, EEP, FIC, FLS, FTI, FELE, GPRO, GERN (?), HGR, HIG, HCP, ININ, IVAC, JDAS, MTW (?), MIG, MTH, MCHP, PRE, PBI (?), PCL, PPS (?), STR, RADN (?), RCII, RKT, SBCF, CONO, SFN, STM, TXRH, TSS, TRID, TZIX (?), UCTT, VECO

Tuesday, April 29, 2008
Before: CAS, AG, ANPI, ADM, ARM, ASH, AVP, BLC, BMS, BYD, BP, BNI, CRS, CEVA, GIB (?), CVG, CYNO, DHX, DXYN, ENR (?), FDP, GKSR, SVHR, GPI, HSII, HEP, HUN (?), ICLR, KNSY, KSWS, LDR, LCAV, LEA, MSO, MAS, MA, MHP, MHS, MYGN (?), NURO (?), NXY (?), ODP, GLT, PAG, PER, PCZ, RDS.A, SMG, SEPR (?), SINT, SPG, SIRI (?), SAH, TSM, TECH (?), TFX, TIN, TPP, TEVA (?), TSCM, TT, TUES, X, UA, VLO, VSH, WMI, WEC
After: ACE, ADVS, ATAC, ALGN, ECOL, AMMD, ARRS, AUDC, AVR (?), BMRN, BXP, BRE, BTUI, BPL, CSCD, CTV, CYH, CNXT, CTS, CYBS, DVA, DENN (?), DRH, DBTK, DWA, DRC (?), EGLT, EQ, EPIC, EQY, ESRX, FEIC, FLEX, FORM, GGP, BGC, GMKT, HRS, HSTX, HS, HIMX, HTCH, JLL (?), KEYN, KFRC, LFL, LFG, XPRT, LNC, LAD, LIZ (?), LNET, MASI, MOH, MPWR, MRH, MOSY, NANO, NATI, NCIT, NETL, HAL, OIS, OTEX, PACR (?), PNRA, PDFS, PLNR, PLT, RSYS, RNR, RUTH (?), SVVS, SCSS, SMI, SHOR, SWIR, SIMO, SSTI, SNWL, SPSS, STAR, SDXC, TE, TRMA, TRLG, VIMC, VPRT, WTS

Wednesday, April 30, 2008
Before: ACW, ALU, ALEX, ALXN, AMED, APU, AACC, AUXL, AVA, BEC, BLT, CACH, CBI, CDI, CNP, CBB, CINF, CL, CEG, COCO, CRY, CMI, DF, ELON, EEFT, FSLR, FORR, FPL, FTD, GRMN, GEO, GOL, GLF, HW, HNT, HES, HPT, INCY, IR, IACI, IPG, IP, IONA, JNY, K, KFT, LFUS, MHO, MWV, MPS, NOV, NTMD, NJR, NOVN, OZM, ZEUS, ORCT, PTI, PNW, PLUG, PMI, PG, RAS, RBC, RHB, RAI, ROC, RSTI, SAP, SEE, SLAB, SPIL, SKYW, SO, SPW, STRA, BRLC, TLM, TSTY, TWX, TWC, TKR, TRS, TRX, TRW, UGI, UIS, UMC, VPHM, VC, WBC, WMAR, WST, WXS
After: ARAY, AKAM, AYE, AIQ, AW, AMKR, ARNA, AHT, ATML, AVB, CAR, AXTI, BLOG, BDN, CBT, COG, CAI, CALD, CBL, CDR, CTX, CEDC, CNQR, DCGN, XRAY, DNEX, DTE, DRCO, EQR, FARO, FISV, FBN, GNK, GMR, GHDX, ROCK, GLUU, GW, GSIG, HVT, HLX, INTX, IRBT, ISTA, ITRI, JDSU, KONA, LHCG, LOOP, MANT, MCGC, MCRS, MIL, MIPS, MRT, MUR, NVT, NBIX, NEWP, NVEC, OIIM, OII, ODSY, OMTR, OKE, OKS, OI, PSEM, PAA, PPO, PRU, PSYS, RADS, O, RNOW, SAF, SGMO, SBAC, SCRX, SFLY, SBUX, STNR, SUNH, SYMC, SMMX, TTEK, TWTC, TLGD, TRN, TTMI, ULTI, UDRL, UNM, URS, VIRL, VLCM, WCAA, WGL, WSH, XFML

Thursday, May 1, 2008
Before: SMLC, ABH, ASF, ADLR, EYE, AMRI, LNT, AMCS, ANSS, APA, AHG, ARQL, AIZ, ADBL, ADP, BKRS, BNT, BBI, BSC, BCO, BRKR, BKC, CVC, CALP, CAM, CNQ, CPLA, CSE, CAPA, CAH, CPHL, CBZ, CTIC, CETV, CTL, CKP, CSK, CI, CLX, CGPI, CMCSA, CITP, CDC, COWN, CUB, CVS, DWSN, DNR, DSX, DSCO, DTG, D, DPZ, DRQ, EK, EFJI, EMS, ELMG, EPL, NPO, ENZN, EQT, EXPE, XOM, FRP, FAF, FE, RAIL, GET, GEL, GTIV, GNA, GIL, GMCR, GHL, HAE, HTV, HPY, HP, HERO, HOS, HWCC, ITWO, ICON, ICTG, IFLO, IPSU, IART, IFF, ITG, IWA, IRM, JRC, KBW, KNDL, KIM, KNOL, LB, LANC, LPNT, LKQX, LOJN, CLI, MRO, HZO, MFA, MDS, MSA, MINI, NNN, NRP, BABY, NNDS, NEWS, NBL, NRG, NUS, NMX, OMX, OMG, ORCH, OFIX, OSK, OSIS, PTIE, PMTI, PRX, PKE, PCAP, PTEN, PCCC, PDGI, POZN, PDE, PEG, QCCO, PWR, KWK, RVSN, RRI, REV, RDC, SGK, SNN, SHOO, SSYS, SXCI, TWTI, TOC, THOR, THI, TBL, TWGP, TYC, TEL, ULBI, UNT, UTHR, VCI, VRX, VNDA, VICL, WPI, WNR, WLK, WMB, WPZ, WPL, WYN, XEL, XMSR
During: EPEX, FNET
After: ABAX, ACS, ARE, ACLI, AFR, ACAP, ARII, ARP, AMSF, ASCA, AOC, AMCC, ARTE, ATO, AVNX, RATE, BARE, BE, BEBE, BGFV, BBND, BPHX, BVN, CAB, CAMD, ELY, CPT, CBEY, CTLM, CAPH, CPHD, CEM, CHK, CQB, CRUS, COGT, CSTR, FIX, SCOR, CRAY, DRIV, DLB, HILL, DNB, BOOM, DIET, EHTH, RDEN, ENH, EVC, EOG, ERES, ESPD, EXAR, EXEL, FCN, GMST, GYI, GFIG, GCFB, HNSN, HL, HIFN, HIW, HMN, HYC, IDSY, IMMR, IUSA, IDTI, IBI, IN, ITMN, IWOV, SWIM, INXI, DMX, JSDA, KCP, KFN, LQDT, LPSN, LAVA, MXWL, MEDX, MET, MIDD, MWY, MNST, MORN, NABI, NCMI, NFG, NATL, NTCT, N, NR, NHWK, NXG, NOVA, NVTL, ORH, OSIP, PDLI, PEET, PSPT, PGTI, PHTN, PROS, PSA, QLGC, RMKR, RMD, RVI, SONE, SNTS, SGMS, SCUR, SGTL, SMSI, SNCI, FIRE, SRSL, SM, STAA, SPF, STAN, JAVA, SHO, SPN, SPSX, TWLL, TX, TRSA, THRM, TWPG, TMA, CLUB, TGI, TMWD, UPL, URI, USTR, CHIP, PAY, WLT, WWIN, WBSN, WRI

Friday, May 2, 2008
Before: AGU, ALE, AMT, AIV, B, BWA, CSAR, CVX, ED, DSPG, DUK, EVVV, FSS, FRPT, HPOL, ICE, SFI, KBR, LZ, MDU, NI, NT, NWN, ASGN, PPL, SRE, VIA.B, WY, WHQ
After: OTTR

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Market Rallies in Thursday's Trade

Good day! Over the past week the market has been correcting off this month's highs. The market had established a two-wave pullback on the 60 minute time frame into Tuesday's lows. This created the beginning of a buy pattern on that time frame. The activity from Wednesday upheld this pattern's development despite the downturn off the morning highs and gradual momentum on the upside into the close. What this did create, however, was a smaller 15 minute short setup in the form of a type of Avalanche setup. When the market hugs a support level with a lot of choppy trade, it become easier for that support to break.

The market opened relatively unchanged on Thursday. The channel from the prior afternoon along the 15 minute 20 period simple moving average gave way early in the session. Now, in addition to the larger 60 minute two-wave buy, the market was also forming a smaller setup of the same type on the 15 minute time frame. The drop for the second wave of selling on the 15 minute, however, was not as severe as it had been on the 60 minute. The indices rolled over at intraday lows between 10:00 and 11:00 ET and broke sharply higher at that time.

Whereas the market had stalled on the 60 minute time frame before offering a continuation of the larger buy setup, the indices did not experience any similar misgivings on Thursday and once the pattern triggered it continued to move decisively higher into the early afternoon. At about 12:15 ET the Dow Jones Industrial Average ran into the targeted highs from Friday. The Nasdaq had already tested those highs on Wednesday, so this breakout was from a third test of that resistance level. As many of you may already know, a third test of support or resistance is the one which is most likely to break.

At 12:30 ET the Nasdaq Composite began to correct. Volume dropped off as it slowly pulled back to form a bull flag on the 5 and 15 minute time frames. The S&Ps and Dow also had slowed their ascent at this time, however, they made two more tests of highs into 13:00 ET. Often this pattern will create a larger reversal, however, the market was still dealing with larger time frame bullish patterns. Volume dropped off sharply as the market pulled back slightly into 13:30 ET. Soon afterwards the correction broke higher to trigger another wave of upside on the 5 and 15 minute time frames.

The afternoon breakout was too premature to allow the market to create as strong of a continuation move as the initial late morning rally. It was enough, however, to bring the S&P 500 into its highs from Friday. That resistance hit just before 14:30 ET and all three of the indices rounded off at highs once that occurred. The momentum shift confirmed at 15:00 ET when a slower ascent off the 5 minute 20 sma began, leading to a breakdown in the final 45 minutes of trade which continued afterhours until all three of the major indices had given back a large percentage of their gains off the morning lows. The S&Ps and Dow fell back 50%, while the Nasdaq returned to approximately the 62% Fibonacci retracement level. These support levels held throughout the remainder of Thursday's afterhours trading.

Thursday's primary session closed with a gain of 85.73 points, or 0.7%, in the Dow ($DJI). It ended the day at 12,848.95. American International Group, Inc. (AIG) led the gainers with a 7.09% rally after it lifted its profit forecast for the year. General Motors Corp. (GM) followed with a 5.59% gain following the surprise earnings from Ford Motor Co. (F) (+11.7%). The S&P 500 ($SPX) closed at 1,388.82, up 8.89 points, or 0.6%. The Nasdaq Composite gained 23.71 points, or 1%, and closed at 2,428.92. I am expecting Friday to be another choppy day. A pullback into the lower end of the daily channel again is quite possible by mid-day. Strong upside will be difficult in the indices as a whole.

In economic news on Thursday, the Labor Department announced that first-time claims for state unemployment fell 33,000 to 342,000. This is its lowest level in two months. U.S. durable goods orders gell 0.3% in March. This was as anticipated and February's data was revised higher. Meanwhile, sales of new homes fell 8.5% in March. This hit a 17-year low and was weaker than anticipated.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Post Gains, but Fails to Hold Highs

Good day! Tuesday's trade left the market with a bullish bias into Wednesday morning. With the first-quarter earnings season now fully underway, however, the bias from the previous afternoon does not always follow through well into the next day. This time, however, earnings assisted this bias. Boeing Co. (BA) led the Dow's gainers after it reported a 38% profit increase. It gained 4.49% on the day. Broadcom (BRCM) was another major winner on Wednesday, adding 16.3% following its first-quarter results Tuesday afternoon.

The session began on Wednesday with another modest gap. This time it was on the upside. The open took place at price resistance from the late-morning congestion on Tuesday. This resistance held and the gap began to close. The S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI) both closed their morning gaps rather quickly. The Nasdaq Composite ($COMPX), while it also fell out of the open, did not quite fill the gap completely, but it made an honorable attempt.

The S&Ps and Dow found support about 20 minutes into the day at the 5 minute and 15 minute 20 period simple moving averages. Prices rounded off at this support over the next 20-30 minutes. 5 minute bull flags triggered in the S&Ps and Dow out of the 10:15 ET correction period, while the Nasdaq triggered a two-wave continuation pattern in the form of a small cup-with-handle on the 2-5 minute time frames. This continued the upside bias that the market had in play heading into the day and the indices rallied steadily higher to close Tuesday's morning gap.

The morning rally took the Nasdaq back to its highs on the daily time frame which we had been targeting as resistance. The S&Ps and Dow did not quite make it back to Friday's targeted highs, however. After closing the gap around 11:45 ET, the market began to pull back. The momentum shift was enough on the smaller time frames to create a larger reversal. It confirmed when the indices formed a 5 minute Avalanche pattern between 11:30 and 12:00 ET and triggered into the 12:00 ET correction period with swift and decisive downside follow through.

The mid-day descent continued without interruption for more than half an hour. The momentum was some of the strongest we have seen on the downside in several weeks, but the volume was not substantial. The degree of the selling was still enough to take the market back to the area of the morning lows. The S&Ps surpassed them with a strong flush, but the Nasdaq slowed as it came into the early morning congestion and its 15 minute 20 sma and 5 minute 200 sma support.

The remainder of the session on Wednesday was quite choppy. The S&Ps and Dow hugged the lower end of their 15 minute 20 smas, while the Nasdaq hugged the upper end of its own. All three indices crept higher along the 5 minute 20 period sma, weaving back and forth, above and below it, into the close. This made afternoon trading in the indices themselves difficult throughout the majority of the afternoon.

The Dow closed higher on Wednesday by 42.99 points, or 0.3%, and 12,763.22. 18 of its 30 components were positive. The S&P 500 also gained 0.3%, or 3.99 points. It closed at 1,379.93. The Nasdaq Composite rallied 1.2% (28.27 points). It closed at 2,405.21.

The slow ascent throughout the afternoon made it easy for the indices to fall apart immediately in afterhours trade. The index futures on all three of the indices dropped to the zone of the session's lows before finding support around 21:00 ET. They were then able to turn over coming off that support and gained ground throughout the early morning hours on Thursday. With things where they stand now, the S&Ps and Dow are still within grasp of a retest of those Friday highs, however, it would not take much of a momentum shift for the correction off those highs to accelerate as they did several weeks ago.

Some of the names to watch out for on Thursday are as follows. Apple (AAPL) and Amazon (AMZN) both posted quarterly earnings on Wednesday after the close. AAPL forecast Q3 earnings of $1/share, which was under estimates, as were its quarterly sales expectations. AMZN's net earnings rose 30%, or 34 cents a share as compared to the 33 cent/share estimate. Its revenue also came in slightly ahead of expectations. Both stocks should be more active on Thursday followed this data.

A number of companies will also be reporting ahead of the open on Thursday and likely to experience strong intraday reactions. 3M Co. (MMM) is forecast to report a $1.36/share profit. ConocoPhillips (COP) is anticipated to report a $2.40/share profit. Dow Chemicals (DOW) is expecting a profit of 94 cents/share. For other earnings to come, please check the list below.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trading Journal Template

Hey gang,

The following is a copy of the trading journal template I designed a number of years back. To this day it remains a great starting point for any journal to help you analyze your individual trades and to use as a starting point for cross-trade analysis. Note: This journal template is copyrighted. I've come across copies of it on other sites since I created it, but if you choose to post it into another format, please be sure to reference the source! Thanks!

TRADING FROM MAIN STREET
DAILY TRADING JOURNAL
Please make sure you fill in every field. The more information you provide, the more it will help you when reviewing your logs.

DATE:
SYMBOL:
SECTOR (if known):
BUY/SHORT (circle one)
TYPE OF SETUP:

ANALYZING THE POSITION:
PROS:



CONS:



CURRENT MARKET CONDITIONS:



EXPECTATIONS:
PRICE TARGET:
REASON FOR PRICE TARGET:


ANTICIPATED RISK TO REWARD:
ANTICIPATED RISK LEVEL (rate 1 to 10 with 10 being high risk and 1 low risk):

ENTRY TIME(S):
ENTRY PRICE(S):
REASON FOR ENTRY AT THAT PARTICULAR TIME AND PRICE:



STOP PRICE AND WHY IT'S SET AT THAT PRICE (also note when the stop was adjusted and why):


EXIT TIME(S):
EXIT PRICE(S):
REASON FOR EXIT:



OUTCOME OF TRADE:
EXPECTATIONS MET? YES/NO (circle one)
TRADE ANALYSIS (Include thoughts on the trade such as what could have been improved, what you felt you did correctly, areas you may need to work on, etc.):







ATTACH A SEPARATE PRINT OUT OF ALL RELEVANT CHARTS FOR THIS TRADE. INCLUDE CHARTS FOR THE OVERALL MARKET WHEN APPROPRIATE. HAVING A VISUAL REFERENCE IS AS IMPORTANT AS A WRITTEN ONE.

U.S. Market Falls on Slew of Disappointing Earnings

Good day! The market had a tough session on Tuesday on the heels of disappointing earnings reports. The top Dow decliner was DuPont Co. (DD). The chemicals company beat by $0.03/share, reporting revenues that were in line, however, the company also warned that weakness in construction and automotive markets would hinder growth. DuPont fell 4% by the end of the day. Texas Instruments (TXN) was another major player to announce early this week. It had reported earnings after the close on Monday. A poor outlook for the second quarter led to a drop of 5.8% on Tuesday. Telecommunications networking company Tellabs (TLAB), which has been in a steady decline since the middle of last year, was hit further after it reported lower first quarter profit and a disappointing second quarter outlook. It lost 13.8% of its share value on Tuesday.

The cumulative effect of the earnings data which came out between Monday afternoon and Tuesday morning created a modest downside gap in the indices. This gap took the Dow Jones Industrial Average ($DJI), S&P 500 ($SPX), and Nasdaq Composite ($COMPX) under the 15 minute 20 period simple moving average. This was the same zone as the afternoon lows in the S&Ps and Nasdaq from Monday and served as a solid resistance zone to begin the session. Early activity in the S&Ps and Dow also brought those two indices under their 5 minute 200 period smas.

The indices fell into a period of congestion following the morning gap which lasted throughout all but the final 15 minutes of morning trade. Volume dropped as the congestion narrowed following 10:30 ET with the indices basing at the intraday lows. The congestion finally gave way at 11:45 ET on strong downside into new intraday lows. This created a second wave of selling on the 30 minute time frame for the S&Ps and Dow. The downside continued until these indices had established an equal move as compared to the selloff from Friday afternoon into Monday's morning lows.

The mid-day downside also took the form of two waves of selling. The first wave took it into the 12:00 ET correction period. It stalled there for about 15 minutes and then continued into the 13:00 ET correction period. This was where the larger equal move level hit and the S&P 500 and Dow were able to test the closing highs from the 17th, ahead of Friday's upside gap. This price support, the equal move support, and the correction period aligned with slowing downside momentum to create a high probability that the market would form another correction off support on the 15 to 30 minutes charts as the afternoon progressed. Since the prior correction took most of Monday's session to form, the odds were high that the correction on Tuesday afternoon would hold into the close. It could either create a bear flag to continue the downtrend, or this could be the second wave of a two-wave pullback and lead to a move back into highs on Wednesday.

The market did congest throughout the remainder of the day. There was a slight upside bias, but nothing to suggest the correction could not be leading into a larger bear flag. This was true, at least, until the final hour of trade. At that point the upside momentum picked up somewhat and the indices congested near afternoon highs until the final 15 to 20 minutes of the day. At that point a Phoenix pattern on the 5 minute charts broke higher.

The Dow closed lower by 104.79 points, or -0.8%, at 12,720.23. The S&P 500 fell 12.23 points, or -0.9%, to end the session at 1,375.94. The Nasdaq Composite lost 31.10 points, or 1.3%, and closed at 2,376.94.

The late day Phoenix setup followed through into afterhours trading with a strong surge higher that took the indices back into the congestion from the morning's activity. The bias remains bullish into Wednesday morning with Friday's highs as the larger time frame resistance. Once again, however, opening data is going to be much more reliable in offering a more accurate intraday bias than the afternoon data from the previous session.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080421-22

Hey gang... I am out most of the week, but have been popping in every once in awhile to post some things I'm seeing as I work on other projects.

Yesterday the only call I posted was Ryder Sys Inc. (R) for a breakdown short. It triggered early this morning after basing throughout yesterday at lows despite larger market strength.

R Short Setup


Today:
10:32 Futures support call for a reversal off lows as a bounce. This call was based upon a 100 tick momentum reversal pattern forming in the S&Ps and Dow and went on to hit the second target objective on this type of play.

Support


10:38 FCX given as base at highs for an upside breakout. Pattern breakout type A. It rallied for more than a point to hit initial target objectives at $121, but larger target of $122 was not met and the remainder was closed with a trailing stop. (This update posted at 11:22 ET)

FCX Buy Setup


12:28 Notice that IPI triggered a "D" style breakout. It triggered over $49.30ish and was trading about $49.75 when I posted, but was given as to watch for cont. of the pattern since this often will pullback a little and then go again. It is currently 12:31 and it it pulling back. $52.35 was given as target zone. This is an IPO though, so it can be rather volatile.

For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif
The green circle is the entry with the red bar as the stop.

IPI Buy Setup


12:34 ET - ES Support Levels:
1373.68 ish is ES 62% fib retracement back to 17th lows
about 1370.31 is the 38% retracement back tothe lows of the 15th on the ES
it is also the zone of lows from the 18th
so those are some upcoming support levels to watch coming up
1366.75 is close from the 17th for the gap closure on the ES

13:14 YM Support: "YM just hit 38% retracement back to the 15th lows... also the price congestion from 16th highs and 17th afternoon into 18th morning... this was also equal move support in YM compared to drop from Friday highs to Monday morning lows"

13:33 NFLX low level base at whole number support from $30 with pattern for more downside.

NFLX Short Setup


Larger correction on 15 min time frame
13:33 charlie1 : Toni..do u see a rally this afternoon? inquiring minds want to know!
13:34 Toni-WeekOff : well we have a two-wave pullback now on the futures on the 15 min time frame
13:34 Toni-WeekOff : equal move levels hit 13
13:34 Toni-WeekOff : so this is a major support zone 13:34
Toni-WeekOff : need momentum to shift though
13:35 Toni-WeekOff : a 2B at lows would be good
13:35 Toni-WeekOff : if it can do that then the odds will be higher for an afternoon rally that is not quite as choppy
13:35 Toni-WeekOff : that is a risk if it just goes from here since the selling pace was pretty steep
13:36 Toni-WeekOff : the 15 min 20 sma is going to be resistance as it was yesterday
13:36 Toni-WeekOff : definitely expecting a larger 15 min correction though
13:36 charlie1 : good i can work with that!

14:23 Toni-WeekOff: watching this correction in the futures...might just turn into a 15 min bear flag.... still lots of room to correct but trying to correct more through time so far
14:23 charlie1: is selling today on light or heavy vol?
14:24 Toni-WeekOff: volume is a little heavy but not much
14:24 charlie1: good
14:25 charlie1: nothing to worry about unless it was heavy vol today
14:25 Toni-WeekOff: for judging time of this correction... look at ES or YM yesterday from lows to close
14:25 Toni-WeekOff: then compare to the move from
13:0014:26 Toni-WeekOff: can take up to that long if this turns into a flag
14:27 Toni-WeekOff: still too early to really say and have room for some more upside in he interim

13:41-Toni-WeekOff : NFLX going
13:42-xr3 : IPI too
13:42-Toni-WeekOff : :)
13:42-Toni-WeekOff : looks good $48.80 is support zone
13:44-Toni-WeekOff : 52.30is IPI target.. whole numbers will be resistance...so reasonably would be 52 area
[13:45- Toni-WeekOff : NFLX the 50 cent levels are price support[13:45] missed but still a buy
13:45 -chastain : IPI b/o
13:46 -Toni-WeekOff : initial target support here NFLX... looking for about 29 rest

13:55 the ISRG momo reversal as a swing from the 11th hit second target level btw.. did it yesterday but still trading there today (was short from between 338-340, depending on trigger used... trading 279 zone with lows in 275 zone)

I will try to find time later today to post some of the charts for the calls on Friday and this week so far. I will not be in the trading room much this week, but will be back next week all day. It's been a pretty nice week thus far for activity thanks to earnings! Wishing you guys well!

Market Corrects Following Last Week's Run

Good day! Although the Nasdaq Composite ($COMPX) held up rather well in Monday's session, the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) struggled to recover early losses. Both had gapped lower by a decent amount at the open following weaker-than-expected earnings from Bank of America (BAC). BAC fell 2.5% after reporting that earnings fell 77% for the first quarter. By the close of the day the Dow had still lost 24.34 points, or 0.2%. It ended the session at 12,825.02.

American Intl Group Inc. (AIG) (-3.5%) and BAC were the two largest losers in the Dow, but Caterpillar Inc. (CAT) also posted losses over 2% (-2.29%). General Motors Corp. (GM) was the brightest of the bunch. It gained 5.7%. Microsoft (MSFT) came in second with a gain of 1.4%. In the other indices, the S&P 500 lost 2.16 points, or 0.2%, and closed at 1,388.17, while the Nasdaq Comp. gained 5.07 points, or 0.2%, and closed at 2,404.04. While financials dragged down the Dow and S&Ps, tech stocks helped the Nasdaq stay above water.

Most of the gains established by the market and the recovery from early morning losses took place in the second half of the trading day on Monday. The session began with a correction off last week's highs. The market bounced slightly following the downside gap and the Dow and S&Ps made it back to Friday's lows, while the Nasdaq closed its gap and found resistance at the 5 minute 20 period simple moving average. These price resistance zones hit about 20 minutes into the day and since the momentum was about average the indices held that resistance and were able to again push to new intraday lows.

The morning downside continued into 10:30 ET. The Nasdaq slid down its 5 minute 20 sma throughout the move, creating higher odds that the resistance would break to the upside. The S&Ps and Dow had a bit stronger downside momentum, but the selling stalled at the same time. A double bottom followed and when the 11:00 ET correction period hit the market reversed and began to move higher.

Most of the action on Monday was rather choppy in the indices as a whole. Although the market moved higher throughout the remainder of the morning and most of the afternoon, there was a lot of overlap in prices from one bar to the next on both a 5 and 15 minute time frame. The Nasdaq broke to new intraday highs very early on in the afternoon. When the S&Ps and Dow came into morning highs, however, and the Nasdaq hit the zone of Friday's highs, the bulls retreated. The market pulled back quickly off the afternoon highs, but was able to round off again at morning support between 14:00-14:30 ET and make their way to new highs on the day once more before the bell.

Although the index futures are down again afterhours, there is still some room for upside on Tuesday. The Nasdaq already began a third wave higher on the 60 minute time frame, so it has room to complete that move, but then I expect things to turn over into the afternoon and head back to the downside. Earnings are a major influence at present when it comes to where the markets are opening each morning, so I would suggest not relying as heavily upon postmarket analysis in the evenings,. Instead, come in ahead of the open each day to get a feel for where things stand as a result of the earnings and economic data that comes out each morning.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Note

Hey Gang,

I'm taking the week off from trading to deal with some other things that have come up, but will be back next week with the wrapup! I will still be doing the nightly action letter, however.

All my best,
Toni

Market Soars on Earnings Data into Friday's Open

Good day! The market action on Friday was quite a contrast to a mere week ago. A disappointing earnings report early this earnings season from General Electric (GE) had sparked concerns that the current economic slowdown would negatively impact earnings across the board this past quarter. Over the course of the week, however, a number of top-name companies reported better than expected earnings and the indices made a strong recovery.

Strength on Wednesday was followed by a resting period on Thursday, but the upward momentum returned into Friday on the heels of earnings from Google Inc. (GOOG). GOOG had reported afterhours on Thursday and was up 10% immediately following the news. By the close on Friday it had gained 89.87 points, making a stellar 20% move. The earning results from equipment-maker Caterpillar Inc. (CAT) also helped boost the Dow Jones Ind. Ave. ($DJI). It led the Dow and closed higher by 8.51%, nearly retaking last year's highs. Another company which moved well on Friday was Honeywell Inc. (HON). It gained 6.3% on Friday.

In this coming week, 157 of the S&P 500 companies are due to report. This will be the busiest week for first-quarter earnings this season and expectations are for a drop of 14.6% as compared to the same quarter last year. Some of the major names to watch for early this week are Merck (MRK), Texas Instruments (TXN), Halliburton (HAL), and Eli Lilly (LLY) on Monday. On Tuesday Yahoo (YHOO), Dupont (DD), Fifth Third (FITB), SunTrust (STI) JetBlue Airways (JBLU), and Kimberly-Clark (KMB) are just a few that will be announcing. Apple (AAPL) and Amazon.com (AMZN) then report on Wednesday following the close, while Motorola (MOT), Amgen Inc. (AMGN), Microsoft (MSFT), and ConocoPhillips (COP) announce on Thursday.

The session began on Friday with an extreme upside gap. The futures had broken higher once again in the premarket around 6:00 am ET after having already posted substantial upside following the close the afternoon before. This activity took the market into the highs from the 7th, which we had been monitoring as resistance. In fact, it brought them just above that level, so instead of being resistance as expected, it became intraday support.

Typically a gap such as this will begin to close within the first 15 minute of the day, and if it does not and ends up holding during that time, then the odds are higher that a trend day in the direction of the gap will occur. On Friday the market defied the odds. It began to close within the first 15 minutes, but the pace of the selling was moderate and there was a great deal of overlap from one bar to the next on a 5 minute time frame.

The market popped when the 10:15 ET correction period hit, breaking the trend from the pullback with more strength than the overall downtrend. A bit of congestion followed as the momentum continued to roll over. By 10:45 ET the market was already coming back into the morning highs. The pace of the buying accelerated and this supported an uptrend bias into the early afternoon.

Since the market had plenty of room to move before hitting an equal move compared to the rally which took place into mid-day on Wednesday, it was easy for the trend to continue throughout the morning, although the buying was rather choppy overall. At 12:30 ET the indices were hitting that equal move level, which, given the 60 minute time frame, was very strong resistance. They began to turn over off highs, but the 13:00 ET correction period held as the indices hit their 5 minute 20 period simple moving averages for support and slightly higher highs were hit into 13:30 ET before the market finally reversed course into the second half of the afternoon.

Although the selling was still on the choppy side, the 5 minute 20 sma served as resistance throughout the move lower and the market experienced several strong, albeit short-lived, bouts of selling. The morning pivots on a 5 minute time frame served as support, stalling the move from time to time throughout the afternoon downtrend. The indices did pop slightly into the close with traders covering positions ahead of the weekend, but turned lower again at the bell.

The Dow Jones Industrial Average ($DJI) closer higher by 1.8% on Friday with a gain of 228.87 points, ending the session at 12,849. On the week as a whole, the Dow climbed 4.3%. The S&P 500 ($SPX) rose 1.8% as well on Friday, amounting a gain of 24 points on the day. It closed at 1,390 and also advanced 4.3% on the week. The Nasdaq Composite ($COMPX) posted the strongest performance on Friday, adding 2.6%, or 61 points, to close at 2,402. This resulted in a 4.9% gain for the week. Gainers outpaced decliners by 4 to 1 on the New York Stock Exchange and 3 to 1 on the Nasdaq on Friday, although overall market volume was typical to that of recent sessions with 1.5 billion shares exchanged on the NYSE and 989 million on the Nasdaq.

The market still offers the potential that another reversal off highs on a daily and weekly time frame may be forthcoming. Although speculation abounds that the economic slowdown may be short-lived and that things are not as bad as feared, it would not take a lot for the market to again drop sharply and continue lower in the summer or early fall. I would expect the Nasdaq to suffer the least compared to the S&P 500 and Dow Jones Ind. Average in terms of the extent of retracement back into the lows of the year thus far. The S&Ps and Dow will be more likely to hit new yearly lows should this occur, whereas the Nasdaq would more likely find support in the congestion from March initially.

Since trading over this next week will be greatly impacted by earnings, I'll be taking things a day at a time based upon how the market begins each session instead of relying as heavily on my evening analysis. That said, however, the market has had two waves of buying on a 60 minute time frame since the 15th and has room for a third, but I do not expect similar momentum and the market can easily begin to shift pace at highs once again to pullback into the latter half of the week. The 20 day sma will once again be support, but the next time it hits it will be more likely to congest along it and can more easily break through it if the market turns over following slightly higher highs on the 60 minute charts, as opposed to if it holds Friday's highs and then chops lower from that point.

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, April 21, 2008
There are no economic indicators scheduled for today

Tuesday, April 22, 2008
7:45a.m. ICSC Chain Store Sales Index.
8:55a.m. Redbook Retail Sales Index.
10:00a.m. Apr Richmond Fed Manufacturing Index. Previous: 6.
5:00a.m. ABC/Wash Post Consumer Conf.

Wednesday, April 23, 2008
10:00a.m. Mar Existing Home Sales. Previous: +2.9%.

Thursday, April 24, 2008
8:30a.m. Initial Jobless Claims.
8:30a.m. Mar Durable Goods Orders. Previous: -1.1%.
10:00a.m. DJ-BTMU Business Barometer.
10:00a.m. Mar Help-Wanted Index. Previous: 21.
10:00a.m. Mar New Home Sales. Previous: -1.8%.

Friday, April 25, 2008
10:00a.m. End-Apr Reuters/U Mich Sentiment Index.



Key Earnings Announcements This Week:

Monday, April 21, 2008
Before: ALDN, AME, AMLN, ACI, BAC, BOH, CNB, CORS, LL, GCI, HAL, HBI, HAS, LEE, MAT, MRK, NTY, NVS, QXM, DGX, SAY, TNB, WFT
After: ALB, AXP, BSX, CR, DAC, DST, EFX, ETH, RE, FDG, FWRD, HPC, HXL, JEC, KRC, LNCR, LOGI, MSPD, NBR, NFLX, NVLS, OMCL, OMI, PKG, PTP, PLXT, RGA, SLG, SFG, STLD, TXN, USNA, VRTX, VNUS, VLTR, WCN, WGOV, ZRAN

Tuesday, April 22, 2008
Before: AKS, AXE, ARB, ASTE, T, AUO, ALV, AVY, BHI, BKRS, BMS, BJS, EAT, CP, CSL, CE, CNC, CME, COH, CPO, CFC, DD, ECA, EEFT, FITB, FMER, GNTX, HSC, HBAN, IEX, IIVI, JEF, JBLU, JRN, KELYA, KMB, KCI, KVHI, LAB, LXK, LMT, MCD, MDP, MICC, NCC, NOC, NS, OMC, OXPS, PCAR, PH, BTU, PNR, PAS, RYN, ROH, SSW, SHW, SII, SNA, STI, TCB, TLAB, UAUA, UNH, USG, WDR, WAT, WU, WHR, WTNY, WYE, XTO
After: RNT, AMSG, ANAD, ANEN, BRCM, CHRW, BCR, CDNS, CLMS, CLZR, CRI, CERN, CVTI, CREE, CSGS, CYMI, EGLT, EGP, EW, WIRE, ENTU, FCFS, FBC, FULT, HBHC, HGIC, IBKC, INFN, IVGN, LDSH, LDIS, MANH, MOLX, NARA, NETL, NSC, NUVA, ODFL, ONNN, ORLY, PXLW, PPDI, RJF, RCRC, RHI, SEAB, SMTL, SIAL, SIMG, SWKS, SSCC, TCO, TER, TRMK, TUP, VFC, VMW, VOCS, XL, YHOO, YUM, ZHNE

Wednesday, April 23, 2008
Before: AMG, APF, ATI, ABK, ABC, ABFS, ARW, ASH, ATMI, BDX, BHP, BIIB, BA, CEG, CFR, CYBI, DAL, DOV, EMC, FCL, FCX, GD, GENZ, GSK, GRP, HMA, JAH, LII, LVLT, LECO, LPX, MPX, MNI, MNC, MCO, MWRK, NWA, NYB, PMTC, PFCB, PNW, PX, PDS, RGS, RIMG, ROK, RES, R, SGP, SRP, SLGN, SPNC, TROW, TDY, TRA, MDCO, UGI, UPS, WLP
During: BUD, EGN
After: AEIS, AFL, ACL, ALL, AMZN, ECOL, AGP, AAPL, ARNA, AXYS, BEZ, BBSI, BRO, BLDR, CLDN, CHIC, CMH, CTXS, CNS, CVGI, CLB, CSGP, CVA, EFII, EPIC, EQIX, FFIV, DAVE, FNF, FADV, FMC, GDI, GGG, GSIC, HLIT, HTZ, HRH, ICO, KEX, LHO, LSI, MTSN, MCGC, MRCY, MEOH, MOBE, MGI, MTSC, NFX, NINE, NE, NTRI, PTV, PRXL, PNSN, PLXS, PHM, QCOM, STR, QDEL, RADN, RMBS, RJET, RSG, RYL, SANM, SCSS, SKX, SOV, STMP, SRDX, TEX, TSCO, TQNT, UB, VARI, VAR, WOOF, VIGN, XLNX

Thursday, April 24, 2008
Before: FLWS, MMM, ABH, AET, AAI, ALK, MO, AEP, AIT, ARTG, ABG, AACC, AZN, AGIX, AN, AVT, AVX, BLL, BDC, BHE, BDK, BMY, BC, BW, BBW, BG, CCMP, CRR, CSH, CRA, CPS, CBR, CNH, CXG, CCE, CNMD, COP, CNX, CBE, DLX, DO, DTG, DDE, DVD, DOW, DEP, ELNK, ELON, ECL, ELN, EME, EDV, EPD, SSP, EXC, EXR, FLIR, FRPT, F, FO, BEN, GMT, GR, HSY, HUB.B, ICTG, IKN, IMN, IMCL, IPCC, IDC, IVZ, ESI, JAKK, JNS, KDN, KSU, KBW, KEI, KMT, KLIC, FSTR, LLL, LH, LTM, LIFC, LYTS, HZO, MDC, MEDE, MLNM, MKSI, MOT, MPS, MWIV, NAFC, NWL, NEM, NOHD, NJR, NCX, OXY, ODP, ORI, OHI, OVRL, OSTK, PTC, PTI, PCCC, PENN, PPCO, PEP, PLUG, POT, PCH, PLD, QLTI, QUIX, RHD, RDN, RTN, FRZ, RGC, RAI, COL, SWY, SCG, POOL, SEIC, SMI, SEPR, SHPGY, SI, SPAR, SPR, SWK, HOT, STFC, SSYS, SU, SY, SNV, SYNT, SYPR, TASR, TNC, TEN, SNAK, TMO, TSCM, TRAD, TRV, UNP, USAP, LCC, UST, VDSI, WAB, WCG, WCC, WMAR, WST, WRLD, XMSR, ZMH, ZOLL
During: AIMC, BPL
After: ABAX, AFFX, AYE, AMX, AFG, ACF, AMGN, ARBA, ARTC, AJG, ASIA, AVID, BIDU, BKUNA, BIDZ, BJRI, EPAY, BTUI, BUCY, BLG, CLS, CENX, CF, CTHR, CHRT, CAKE, CHE, CB, CCU, CCO, CNET, COBZ, COHR, COHU, COLM, CTV, EXBD, DVW, CW, DDUP, DCT, DECK, DFG, DV, DSCM, DDR, DXPE, BOOM, EMN, ESIO, ELX, EPIQ, EXAR, EQPW, FALC, FIS, FR, FMD, FDRY, GNW, ROCK, HITT, HME, HUBG, IKAN, INSP, IM, INSU, IDTI, ISSI, IBKR, IOM, IRBT, ISTA, XXIA, JJSF, JNPR, KLAC, KNX, LFL, LSCC, MEE, MFE, WFR, MMSI, MTD, MCRL, MSCC, MSFT, MTX, MCRI, MRT, NLS, NCI, NTGR, N, OPWV, OPLK, OSIP, OSG, PKTR, PCTI, PKI, PFWD, PRAA, POWI, PWER, RACK, RMTR, RRC, RVBD, ROP, RRR, WINS, SVVS, SCSC, SCRX, CHK, SIGI, SIMO, SIRF, PCU, SPF, STNR, SRCL, SWN, SYNA, TNL, TZOO, TRMB, TYL, GROW, UHS, VSEA, VVUS, VLCM, WRB, WDC, WGL, WLL, WSH, GB, WMGI, ZIGO

Friday, April 25, 2008
Before: ACPW, AXL, CSUN, SUR, CCUR, CVH, CVTX, ETR, GT, IDXX, ITT, LNCE, ERIC, MBFI, NNI, OPTR, SAIA, VVI, WEN
After: ABMD, BFAM, DHOM, ENTR

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!

Trade Wrapup - 20080418

09:36 Toni - This gap took The ES just above the highs on the 7th Same for the NQ sitting intraday on top of those highs but still in that resistance zone

09:38 Toni - HON on upside watch list due to favorable daily chart today

09:39 norancho - EQIX similar to HON

09:41 Toni - MHK also favorable for upside today to watch for cont. patterns

09:41 Toni - nasdaq gainers:
09:41 Toni - Symbol
09:41 Toni - AAPL
09:41 Toni - GOOG
09:41 Toni - RIMM
09:41 Toni - AMZN
09:41 Toni - BIDU
09:41 Toni - ZION
09:41 Toni - PCAR
09:41 Toni - WYNN
09:41 Toni - EXPD
09:41 Toni - DRYS
09:41 Toni - FISV
09:41 Toni - OSTK
09:41 Toni - FWLT
09:41 Toni - TROW
09:41 Toni - SHLD
09:41 Toni - JOYG
09:41 Toni - BMRN
09:41 Toni - MELI

09:43 Toni - WYNN is on my long watch list

09:46 Toni - Note: This gap did not hold up in the first 15 min of the day... created higher odds it will not hold up well
09:46 Toni - does have first support in here

09:46 Toni - nyse losers:
09:46 Toni - Symbol
09:46 Toni - ABX
09:46 Toni - FCX
09:46 Toni - POT
09:46 Toni - GG
09:46 Toni - NEM
09:46 Toni - KGC
09:46 Toni - PBR
09:46 Toni - X
09:46 Toni - MOS
09:46 Toni - AEM
09:46 Toni - BHP
09:46 Toni - VAR
09:46 Toni - PBR.A
09:46 Toni - PDE
09:46 Toni - CNQ
09:46 Toni - IVN
09:46 Toni - ATN

09:53 Toni - GS base at highs

10:29 Toni - FWLT cup with handle 2 min
10:43 Toni - just under morning highs is initial target on FWLT
10:44 Toni - coming into that target zone now

10:47 Toni - futures here at morning high resistance

12:06 Toni - 12884 is next YM resistnace zone

12:34 Toni - futures resistance zone
12:39 Toni - caution on new long positions at this time

14:02 Toni - the majority of the market gainers look done

Market Experiences Another Day of Mixed Trading

Good day! The market struggled to find a strong directional fit on Thursday following mixed earnings from top names such as International Business Machs. (IBM), Ebay Inc. (EBAY), and Altera Corp. (ALTR). These three had announced earnings after the close on Wednesday and were followed by large upside gaps in IBM and ALTR and a strong downside gap in EBAY. Nokia Corp. (NOK) and Merrill Lynch (MER) both announced ahead of Thursday's open. NOK was severely beaten, while MER managed to recover from a slight downside gap.

After heading sharply higher Wednesday in afterhours trade, the index futures slowly, but steadily, reclaimed most of the gains during the premarket hours. The premarket economic data had very little impact, but were not helpful in providing a further upside boost. Jobless claims rose 17,000 last week to hit 372,000. This was pretty much in line with expectations.

When the session began, the Nasdaq 100 EMinis (futures symbol NQ) were in positive territory by a hair, while the S&P 500 EMini (ES) and Dow Jones Industrial Average (YM) was slightly negative. Not a lot of action took place within the first 15 minutes of trade, but all three indices did close their gaps during that time and then fell quickly lower for several minutes at 10:00 ET. This two-wave pullback on the 5 minute time frame created a buy setup into 10:15 ET.

Although the Nasdaq had the stronger open, the S&Ps and Dow took over coming off the early morning lows. Both indices pushed quickly into the prior afternoon's intraday highs, breaking them by a hair and then retesting them a second time about 15-20 minutes later. This rapid retest created a 2T pattern on both the 5 minute and 2 minute time frames, resulting in a trap for the bulls that allowed the market to pull back throughout the remainder of the morning.

The Nasdaq suffered the most on the late morning correction. Although it found support initially at the morning lows around 11:00 ET, a small continuation pattern formed in the indices into 11:15 ET and was followed by another wave of selling into 11:40/12:00. The S&Ps and Dow both came into support at the morning lows at that point, but the Nasdaq was already back to where the morning momentum had slowed the previous day and had even fallen through Wednesday's afternoon lows.

As noon hit, the momentum slowed on the downside. This is a common reversal period for the market and the indices made an attempt to bounce off it. The momentum had not rolled over quite well enough to break the 5 minute 20 period simple moving average, however, and a second test of the lows took place into 12:30 ET. This time the indices had slid down the 5 minute 20 sma and the retest of lows created a stronger reversal pattern into the early afternoon.

While the stronger Dow found support at morning lows at the 15 minute 20 sma, this same moving average acted as resistance for the Nasdaq on its early afternoon rally. It hit at the same time as the 13:00 ET correction period and pushed the Nasdaq into a trading range. The S&Ps and Dow were able to still continue higher without worrying about resistance other than the morning highs. This resistance zone hit shortly before the 14:00 ET correction period, although the indices did not quite test the exact highs. The Nasdaq had begun hugging its 5 minute 20 sma at that time and it fell apart at the same time as selling hit in the other two indices.

This second pullback on the afternoon lasted until about 14:10 ET. The mid-day congestion zone served as support and the market bounced quickly back to the early afternoon highs. Since this created a "V" formation on the 5 minute time frame, those highs again served as resistance, creating another smaller pullback into the 15:00 ET correction period. After being held back all day, the Nasdaq really owned this afternoon breakout. It spiked to hit a move equal to that which had taken place into 13:00 ET, but it didn't stop there.

While the S&Ps and Dow stepped to new highs on small 1 minute bull flags, the Nasdaq based and then broke higher just before the close in the final 15 minutes of trade. It returned to opening price levels. Although not as impressive overall compared to the S&Ps and Dow which made higher highs in the afternoon, this was quite an accomplishment given how much farther it had to move in order to even come close to hitting earlier highs. Unfortunately, the stair-stepping was an issue for the S&P and Dow because it opened the door for a rapid, as opposed to gradual, correction into the close. This made it difficult for any of the indices to hold onto their late day gains.

The S&Ps and Dow closed relatively unchanged on Thursday, while the Nasdaq posted small losses. The S&P 500 ($SPX) ended the day higher by a fraction of a point, up 0.85. It closed at 1,365.56. The Dow Jones Industrial Average ($DJI) gained 1.22 points. It closed at 12620.49. The Nasdaq Composite ($COMPX) lost 8.28 points. It closed at 2,341.83.

Leaders in the Dow included Citigroup (C) (+2.52%), American Express (AXP) (+2.17%), and IBM (+2.17%). Top losers were Pfizer (PFE) (-3.32%), Merck & Co (MRK) (-2.70%), United Technologies (UTX) (-2.53), and Procter & Gamble (PG) (-2.47%). In the Nasdaq, standouts included Altera Corp. (ALTR) (+8.65%) and Level 3 Comm. (LVLT) (+5.16%) on the positive side and Ericsson L M Tel. Co. (ERIC) (-4.5%), Wynn Resorts (WYNN) (-4.06%), Gilead Sciences (GILD) (-3.55%), and EBAY (-3.46%) on the negative side. Additionally, Merrill Lynch (MER) closed higher by 4.4%.

Google (GOOG) announced earnings just after the market close on Thursday and sent the index futures sharply higher. The company says that its first-quarter profit climbed 30% with net income up $4.12/share, surpassing analyst expectations. Its revenue rose 42% in the past year. GOOG itself was trading higher by more than 10% in after-hours trade.

This news alone can easily create continued upside in the market as a whole into Friday morning to help take the indices back to those highs from the 7th that I had mentioned yesterday as resistance. Thursday's highs were price resistance from the 10th. It was a gap closure level in the Nasdaq and highs for the S&Ps and Dow. The NQ went on to hit those highs itself within 15 minutes of the close on GOOG's news. I am a bit leery that the S&Ps and Dow stair-stepped into this level after Wednesday's gap, so while I'm bullish for opening action, I am pretty open as to what the intraday trade with bring and do not have a huge bias for intraday trading on Friday.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080417

Trade Wrapup - Thursday, April 17, 2008

09:28
gapping lower:
EBAY
SPWR
ISIL
PLCM
ERIC
TTWO
EPIC
JASO
FSLR
BIDU
RIMM
GILD
GOOG
GOLD
AMZN
SMSC
QCOM
VIVO
STLD
AAUK
JBHT

gapping higher:
SYMC
FUQI
CHKP
AVAN
AVCT
ALTR
DELL
TEVA
CRNT
PHTN
MICC
TRIN
RYAAY
DROOY
XLNX
NTRS
ZION
CPHD

09:29 market is loking to open slightly lower it is hitting support in the premarket rounding off a bit at premarket lows hthere is some smealler time framer resistance here at 5 min 20 sma all sessions charts frame

09:39 market is still melting down quite a bit
i am looking for some back and forth type of action overall so i want to see how the market reacts to support levels
the nasdaq is the one really having trouble
the ES ans Dow are actually still holding up

09:53 - SMSC basing at lows
10:09 - SMSC off watch

10:09 - ES hit 15 min 20 sma support

11:20 -Eternum- Toni, does it look like futs are making avalanche on 5 min?
11:21 - Toni - ES and YM can if they contonue to congest here... would be the very start of the base for one
Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4

Market Soars on Heels of INTC and JPM News

Good day! The market once again experienced an extreme gap on Wednesday. As on Tuesday, the gap was to the upside. The index futures had popped sharply following Tuesday's close. Intel Corp. (INTC) had announced that it expected revenue to beat analyst expectations and predicted a 56% gross margin for the second quarter. J.P. Morgan (JPM) also provided a boost for the bulls. The first-quarter profit cut that had been anticipated ended up being less than analysts had predicted.

I underestimated the impact of the INTL news when I wrote last evening's column, but the market has some fairly stringent guidelines for gaps such as this. If it starts to close within the first 15 minute of the day, then it will typically fill within the first couple of hours. If it holds, such as bases or pulls higher, then the gap will have significantly lower odds of closing and trend days in the direction of the gap become more likely. Since this particular gap was also off that 60 minute support zone we had been looking at over the past couple of days, it made it even easier for the market to hold up once the initial opening trade action had passed.

After slight upside at the open, the market headed a little higher after the first 15 minutes, but then fell into a trading range along the highs for half an hour. The 10:15 ET correction period held and the indices broke sharply to new intraday highs. This was the strongest move of the session, but the momentum slowed between 10:30 and 11:00 ET. The 11:00 ET correction period held in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI), but the Nasdaq Composite ($COMPX) continued to push to new highs intraday.

From 11:00 to 12:00 ET, the S&P 500 and Dow corrected by falling quickly off highs for several minutes and then hugged support, creating a small 5 minute Avalanche pattern into noon. This resulted in a two-wave pullback for a continuation buy setup in the to the early afternoon. The market again moved to new highs, albeit barely, into 12:30 ET before falling into a larger correction throughout the rest of the first half of the afternoon.

Market volume was high on Wednesday, but it declined somewhat as the indices pulled back, forming a series of tiny bear flags into 14:30 ET. The gentle pace and the lighter volume, in addition to the 15 minute 20 period simple moving average support created the high probability that the market would hold its bias and remain bullish into the close. The indices formed a small congestion after breaking the gradual downtrend along the 5 minute 20 sma. This broke at 15:00 ET, first leading the market to a retest of the afternoon highs and then pushing through them. The S&Ps took over the lead, while the Nasdaq faltered somewhat in the final 30 minutes of trade. All three indices, however, closed near the intraday highs and the index futures busted through those levels following the closing bell.

The Dow gained 256.80 points on Wednesday, or 2.1%. It closed at 12,619 with 28 of its 30 components in positive territory. The S&P 500 rose 30.28 points, or 2.3%, and closed at 1,364. The Nasdaq Composite advanced 64.07 points, or 2.8% and closed at 2,350. The Russell 200 outpaced them all, rising 21.33 points, or 3.08%, to close at 713.21. I am expecting the market to continue to push higher in Thursday's session with the highs from the 7th serving as strong resistance. If the market moves higher in the morning, however, it will have a difficult time continuing into the afternoon, so a correction on a 30 minute time frame would then be something to look out for. If it opens relatively unchanged, pulling back again in premarket trading, then it can congest throughout the morning and break higher into the afternoon.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080416

Trade Wrapup - Wednesday, April 16, 2008

9:49 - 30 min 200 sma is index resistance (1352.21 is ES 200 sma on 30 min1351.3 is also fib resistance)(1831.15 is same zone on the NQ)

9:59 - AIG basing at highs
10:07 - AIG off watch for now

10:07 - ITRI swing is back in play today finally

10:15 - FSLR base at highs ($293.80)
10:30 - FSLR first resistance ($296)
FLSR hit equal move target into $297

FSLR Buy Setup


10:49 NQ hit highs from 4/11 price resistance
10:50 ES hit lows zone from 4/10
10:50 these are the ressitance levels hitting here
10:51 ES also had 1356.92 area as -38.2fib level from initial morning rally

12:28 - SWY keep on watch for short setups this afternoon sucah as "D" pattern on 5 min
Breakout Template: For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
UPDATE: "D" pattern and other breakdown template setups failed to form.

14:47 - NTRS and WYNN attempting to form avalanches
5 min
15:16 - wynn and ntrs off watch

14:50 - futures are still holding up pretty well
thinking they will continue to do so but overall more choppy into the close

Market Hits Daily Support

Good day! As I stated in yesterday's column, the market bias on the 60 minute time frame was still bearish going into Tuesday's trade. Ahead of the open, however, the market received a short-lived boost from the early morning economic data.

The Empire State index, which serves as a gauge for manufacturers in New York State, jumped almost 23 points in April, from a negative 22.2 reading in March to 0.6. In a separate report from the Labor Department, wholesale prices climbed 1.1% in March, led by rising energy and food prices. The core producer prices index, which excludes these two, rose only 0.2%. While the core PPI was in line with expectations, the PPI as a whole was much higher than anticipated. Crude oil hit new records once again intraday on Tuesday after spiking to highs following the data.

The premarket data created a sharp upside gap in the market as the regular session began. As discussed on Friday, most of the extreme gaps in the market will fill within the first two hours of trade. They must begin to do so within the first 15 minutes, however, to maintain that bias. On Friday they did not, but selling hit almost immediately following Tuesday's open. This eventually led to new lows to confirm the larger 60 minute bearish bias.

The Nasdaq Composite ($COMPX) experienced the smallest gap out of the three major indices on Tuesday morning. It was hence the first of the three to hit its 5 minute 20 period simple moving average support coming out of the early morning selling. This level hit at 10:00 ET and stalled the selling momentarily. Both the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) also stalled at this time. The momentum of the selloff, combined with the extreme gap size and subsequent bearish bias were too strong to allow for any decent price correction off that support and by the 10:15 ET correction period the indices were making their way to new intraday lows.

The price level from the gap closure was the next support zone for the market. This hit in all three of the indices minutes ahead of 10:30 ET. The Nasdaq pushed lower to close the gap from April 31st, but the S&Ps and Dow finally had a chance to catch their breath and the Nasdaq followed at the 10:45 ET correction period. The pace of the downturn, however, prevented the bulls from gaining a foothold and the market fell into a congestion zone along the intraday lows at the level of Monday's close. Volume declined during this correction with the Dow hugging its 5 minute 20 sma to form a 5 minute Avalanche pattern, which is a short setup coming off a price reversal.

The Avalanche and continuation of the morning's selloff triggered into the 11:00 ET correction period. Momentum was strong for about 15 minutes. At 11:15 support hit once again when the Dow came into its measured move level from the earlier descent. The indices held the lows and began to round off at the support. I had hoped to get a better price reaction more quickly off them, but the market congested there for awhile, gradually shifting momentum into the early afternoon. I had a difficult time locating decent setups at this time. Patterns which looked decent on the smaller time frames were most often going against a larger time frame bias.

At about 12:15 ET the market displayed its first real sign of some afternoon strength. The Nasdaq and S&Ps had been hugging the 5 minute 20 sma and broke that level to trigger a Phoenix buy. This took the market higher into 12:45 ET. Price resistance from earlier congestion intraday in the Nasdaq and S&Ps stalled the move.

If the bears were going to regain some control, this was their chance to do so. Instead, they fell into a two-wave correction along the afternoon highs, basing into the 5 minute 20 sma, which had previously been resistance and creating a bull flag on the 5 minute time frame into 13:15 ET. Within only about 15 minutes all three of the indices had regained approximately 50% of the losses off the day's highs. This price level stalled the ascent and another bull flag formed on the 5 minute time frame which took the market into a new afternoon highs at 14:00 ET.

By this point the indices had reclaimed about 62% of the morning losses and the Nasdaq 30 minute 20 sma was hitting as resistance. This resistance, along with the 14:00 ET correction period, opened the way for another correction off highs. I expected this move to correct longer than the prior two, but to hold up fairly well overall with the 5 minute 20 sma once again initial support. A small 2 minute Avalanche took the indices into this support, but the bounce still managed to hold the prior highs as the indices held the bias for a larger reaction off resistance in the final two hours of trade.

The market remained stuck in a large congestion on the 15 minute time frame throughout the rest of the day. The 15:00 ET correction period hit as the indices were coming into 15 minute 20 sma support, and this level held, albeit slowly at first, creating a retest of the zone at afternoon highs. The did manage slightly higher highs at that zone, but essentially continued to congest. In the final minutes of trade the indices made a run for highs to break the range. The S&Ps and Dow succeeded, but held opening prices as resistance.

Thanks to the late day rally all three indices managed to close in positive territory. The Dow gained 60.41 points, or 0.5%, to close at 12,352. Alcoa Inc. (AA) posted the largest gains with a move of +2.68%. WalMart (WMT) was a close second with a gain of 2.03%. AIG, JPM, C, XOM, UTX, INTC, and AXP all gained more than 1%. Boeing (BA) was the top losers, falling 1.97%. Airlines overall were very hard hit on Tuesday. Delta (DAL) lost 12.6%, while Northwest (NWA) fell 8.4% on news of a proposed merger. The Amex Airlines Index fell 4.34%.

The S&P 500 gained 6.11 points, or 0.5%, on Tuesday, ending the session at 1,333. The Nasdaq Composite rose 10.22 points, which was also 0.5%. It closed at 2,286. Other sectors under pressure were banking and biotechnology. Top performers included gold, oil, health care, and housing stocks. The market came into the support zone between the lows of the 28th and gap of the 31st of last month in Tuesday's session. Event though the market bounced into the afternoon, another test of that support zone is still quite possible. At the very least I am expecting congestion with a slight pullback on Wednesday morning. This week so far has been a tough one and Wednesday is likely to continued to be so as well.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080415

Trade Wrapup - Tuesday, April 15, 2008

11:35 am ET - Hey gang, I was out this morning and missed the best breakdowns of the morning *frown*.... I have meetings today, so I'm going to be in and out, but will update as the day progresses....

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10:34 - KCI is basing at lows. A con is that this has been moving strongly lower for a number of days already then gapped large today
11:04 - KCI off watch

11:06 flea: INFY ?
Toni: i like that daily for more upside this afteroon... infy... the momentum intraday here is not great though... can easily pullback (aka flush) since its just creeping higher

11:17 futures at support

11:19 AoN: Toni - ur thoughts on DECK plz?
Toni: i like it .. concern is the extreme move already though. the daily is good for a swing short

11:41 LEH 5 min momo reversal short

11:54 futures hit 5 min 20 sma

12:19 DRYS starting to form a bear flag on the 5 min
12:29 DRYS off watch

12:40 Toni: so many things i am finding today have cons with the larger time frames... like POT is forming a "D" setups short on the 5 min but the daily is bullish
Breakout Template:
For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif
The green circle is the entry with the red bar as the stop.
That is the breakout patterns link btw

13:29 indices at 50% retracement back to highs

13:49 ES just hit 62% retracement back to highs
NQ at 30 min 20 period sma

14:03 LDK base at intraday lows - not available on IB

14:07 fut looking to remain bullish.. 5 min 20 sma as support on this congestion.. expecting congestion here along the NQ 30 min 20 sma

14:12 2 min futs avalanche forming in NQ and YM... 5 min 20 sma is support
14:31 futures holding that 5 min 20 sma... was a nice avalanche scalp

14:52 momentum is a bit strong for the market off this retest of highs
gonna make a longer congestion along highs more difficult
has first bit of support here
will see how it handles it but not looking great
(update: market held support but had to round off at the lows instead of being able to bounce quickly because of the momentum on the selling into the support... eventually it was able to offer the continuation pattern on the congestion along the 30 min 20 sma in the NQ, but didn't do so until heading into the close)

15:17 MTW 5 min bear flag - ran out of time... I had shorted within the range and had to scratch, losing 5 cents a few min. before the closing bell...

WRAPUP
Overall a difficult day for me... Did not have time to do as much scanning intraday and missed the open as well as mid-day breakouts due to other engagements, so ended the day flat. KCI ended up going into the close, but I had passed on it. Opps!

Fibonacci Series Question

QUESTION:

Hi Toni,

With the utmost respect for your analytical work that I like,[ basically for its simplicity], I respectively wish to draw your attention to the fact that when dealing with Fibonacci numbers, I have never seen the figure of 1.318 listed.
Yes, I'm aware that the number sequence includes 0.618, .....1.00,.....1.618, ...2.618, etc. and intermixed in that sequence are the figures 0.318, ....1.00, and 1.272, , but not 1.318.

my best authority for this is the book by Bryce Gilmore, "Geometry of markets 11 "- page 8, -Time and Price Measuring Tools.

Thanking you for your most interesting website and emails that I always appreciate very much,
-----

ANSWER:

Hello,

The 1.318 is just the 100% retracement plus a .318 extension, so I use it as a .318 extension in the opposite direction if that makes sense.

All my best,
Toni

Question Regarding a Trading System

QUESTION:

Afternoon Toni,

I am looking forward to the arrival of your CD series, to compliment my existing knowledge and experience in the markets. In the meantime, I am paper trading a chart pattern that seems to be working ridiculously well, and I want to see what your thoughts are about it.

I am using an 5 minute intraday chart, with a 5 & 10 period EMA.
When the 5 crosses the 10 to the upside, with uptrending RSI, go for the long scalp.
When the 5 crosses the 10 to the downside, with RSI lacking, go for the short scalp.

I have applying the study to a lot of different stocks, and the results are almost always the same, trending in the correct direction. I also generally wait for a second or third bar to confirm direction, as the first bar or two can display too much chop.

Just looking for some feedback.

Thanks in advance.

ANSWER:

Hey!

I hope that you are doing well! Moving average cross-overs are a popular way to trade. As to whether your system works long term, I am not certain. I don't use an RSI at all and do not use the same moving averages. It sounds like you are employing a scalping strategy to focus upon short momentum bursts. Many systems will last for several weeks to several months on end before failing or leading to substantial losses before they begin to perform again. As such, it would take awhile to prove. It will also depend upon your stop and target parameters.... I would suggest printing out a chart on each trade and starting a journal. You can track the progress of this system that way. Use the traits that I teach in the CD course to form list of pros and cons. This will help you refine your system.

All my best,
Toni

Scanning for Setups

Question:

Do you show the student how to pick the stocks that meet the technical setups using a stock scanner such as TC 2000? If not, how does the student generate a watch list of potential candidates to trade?

Answer:
Hello! I use TC primarily for swing and position trading. As such, I only tend to use it on weekends and really do not apply many filters at all other than limiting it to stocks which trade over an average of 300k shares/day and are trading over $15/share. Then I just start from the highest volume and scan through them manually watching for setups that "catch my eye".

I know this is certainly not what would be ideal for most people. It usually takes me a couple of hours, but I'll flip through it as I'm watching a movie or such.

Intraday I will scan for percentage and price gainers and losers and morning gappers to tell me the best place to look for intraday momentum. I manually scan through these to identify favorable daily setups which will help support intraday setups and often provide me with additional swingtrade setups as well.

If you are in the live trading room I would suggest private messaging Brandon, because he uses TC much more often than I do and has additional scans/parameters he uses.

My study and style of analysis is focused more upon being able to quickly and easily identify high-probability trade possibilies by just flipping through stocks and training one's eye to look for key characteristics displayed in the security's price action.

All my best,
Toni

Market Struggles After Friday's Meltdown

Good day! After the sharp return of selling on Friday, the market was mixed as the new trading week began. Still reeling from the blow inflicted by General Electric's (GE) disappointing earnings and annual forecast, the bulls were hesitant to commit and remained so throughout the session. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) had the most difficult time throughout the morning due to continued weakness from the financial sector.

Even though a few stocks did manage to trend nicely on Monday, the day was a difficult one when it came to locating solid setups for strong follow-through. I had managed to find WB and APOL early on for continued selling early in the session, ZION for a mid-day breakdown, and STI for a late day breakdown (all on the short side), but also ended up stuck in CRS, which attempted to continue lower early in the afternoon and failed. Of course, the higher risk from the early morning extension was a main contributor to this. The problem on Monday, however, was that most of the potential setups I came across intraday had similar risk factors and pickings were much slimmer than usual.

Volume was on the light side of average in Monday's session and the market was unable to establish a strong trend bias intraday. The morning began with some continued weakness and downside follow through from the prior session, but the main trait was that the choppy trading from the final two hours on Friday also followed through. Ahead of the open, the index futures managed to cut some of its premarket losses when the the Commerce Department reported a slight increase in March retail sales data, beating expectations. It was not enough to hold, however, and the market opened relatively unchanged and still faced with the downtrend set in play Friday morning.

The Nasdaq Composite ($COMPX) hit support early on in the day when the NQ, which is the Nasdaq 100 EMini, hit its -38.2% fibonacci retracement level from the downside move which took place between April 7th and 9th last week. This support held perfectly and the NQ reacted accordingly. The next major fibonacci level for the NQ was just over 1816 and became my target price zone.

The S&P 500 and Dow Jones Ind. Ave. did not have as strong of support levels hitting. Although they both pulled higher out of the 9:45 ET correction period with the Nasdaq, they fell sharply at 10:00 ET when the February Business Inventories data came out. U.S. business inventories rose 0.6% in February from a revised 0.9% increase in January.

Although the Nasdaq was able to hold support at 10:15 ET, the S&Ps and Dow fell to new intraday lows. The correction off that support was more gradual than the descent into it and created an Avalanche short pattern in the Dow. This triggered out of the 11:00 ET correction period. All three of the indices also held this correction time period and began to fall. The Dow and Nasdaq were also reacting to the 15 minute 20 sma resistance at this time. Both the S&Ps and Dow once again made new lows, but held the equal move zone from the prior 5 minute decline, while the Nasdaq again held the morning lows.

The market began to move higher once again at 11:30 ET. The move was on the gradual side into the 5 minute 20 sma. At that point, however, instead of reacting to the resistance with a bear flag on the 5 minute time frame, the 5 minute 20 sma zone held and a congestion area formed. The congestion created a Phoenix pattern, albeit a very premature one. It triggered at about 12:30 ET and the market moved steadily into the day's highs. These served as resistance in the Dow, but the S&Ps and Nasdaq were able to break them before the 13:00 ET correction period hit and turned the market around once again. This also corresponded to a number of other resistance levels. The ES (EMini S&P 500) had returned to its own -38.2% fibonacci level from last Monday to Tuesday's drop and the NQ was hitting its 30 minute 20 sma and the target zone from the bounce (although it did fall a few ticks short).

The light volume on the rally did not sit well with the bulls. The pullback off the highs, while not as sharp as the rally itself, was still on the strong side. Within that pullback the market lacked any strong upside moves to shift the momentum in favor of a triangle or longer congestion to allow the bulls to maintain control throughout the afternoon. As a result, the indices just chopped lower throughout the remainder of the session with the 5 minute 20 sma serving as resistance. The day's lows held as support, but there is not much to suggest that the bulls will be able to regain control in Tuesday's session either.

The Dow Jones Industrial Average closed lower by 23.36 points on Monday, a loss of 0.19%. It ended the session at 12,302.06. The S&P 500 fell 4.51 points, or 0.34%, and closed at 1,328.32. The Nasdaq Composite dropped 14.42 points, or 0.63%. It closed at 2,275.82. The Russell 2000 lost 2.09 points, closing at 686.07, down 0.3%.

The top declining sector on Monday was the banking sector. The Philadelphia Banking Index closed lower by a whopping 4.23% on Monday. The AMex Securities Broker/Deal Index fell 2.78%, while the PHLX Housing Sector Index dropped 2.17%. The gainers on the day came primarily in oil and energy-related stocks. The PHLX Oil Service Sector Index rose 2.36%, while the Amex Oil Index climbed 2.78%. The Amex Airlines Index also rose. It closed higher by 2.87%. The Amex Gold BUGS Index climbed 0.61%, while the Amex Natural Gas Index gained 2%.

In the financial arena, Wachovia (WB) reported that it would raise $7 billion in capital and cut its dividend after reporting a large first-quarter loss. It fell 8.1% on the day. The gap lower from the daily triangle is what had caught my attention earlier in the session. Also hit were Bank of America Corp. (BAC), which fell 3.7%, and Citigroup Inc. (C), which lost 3.6%. American Express (AXP) fell 1.5% on Monday.

The momentum on the 60 minute time frame remains bearish with the gap level from the close on March 31st as the next major support in the indices. After that the lows from March 28th are price support. I expect the momentum to slow coming into the zone between these two levels to allow for a larger correction off these lows on the 60 minute time frame. Until then, however, I urge a great deal of caution on the long side for the most part.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Toni's Little Vampire

Over the weekend we went to a b-day for the son of a trader friend of mine. My little guy has lost both of his front teeth. He is quite fond of making goofy faces at the camera and my daughter caught this lovely pose. He is my little Count Dracula (the vegetarian version of course!!!)

Toni's Trade Wrapup - 20080414

TRADE WRAPUP - Monday, April 14, 2008

All times are Eastern.

9:36 FSLR upside watch list (This means continuation patterns on the upside)
At 9:43 FSLR was removed from the watch list.
UPDATE: This did give a buy setup later on in the morning, but I did not return to this chart in time to take advantage of it. I have posted the chart here, however, to show how the daily caught my eye and how the intraday trigger would have taken place.
The daily remains bullish.

FSLR Buy Setup


9:41 WB watching for short side (This means continuation patterns on the downside)
WB triggered under $25.66 at 9:48.
WB first support for initial partials was given as $25 at 9:51. It hit at 9:52.
WB hit trailing at 10:20 over $25.72.
The daily remains bearish.

WB Short Setup


9:44 NQ support (This holds as the morning lows)

NQ Support


9:57 1816.25 given as next NQ resistance on the larger time frames.
At 12:55 this is updated because the NQ was hitting the 30 minute 20 sma when the ES was hitting resistance at that time (This ES is given at 12:50).

10:10 APOL given to watch for more downside. Nice daily cited, but also had intraday bear action and was triggering a breakdown at the time. It made a $0.70 move before hitting support. The daily continues to remain bearish.

APOL Short Setup


10:26 TSL forming 5 min Avalanche.
This did not trigger and was not shortable on IB, hence removing it from watch.

TSL Potential Short Setup


10:40 ISRG base at lows.
This also did not trigger. ISRG was given as a momentum short setup as a swingtrade on Friday morning between $338-340. It hit lows on Monday of $315.

11:06 MTB alerted as swingtrade short on corrections off intraday support. Earnings cited as something to watch out for. It was trading $81.48 at the time of the alert. It closed at $80.75 after several upside corrections intraday into the $81.80 area.

MTB Short Setup


11:07 ZION base at lows.
11:28 ZION first support $42.50 with $42 target.
13:49 "ZION hitting target zone."

ZION Short Setup


12:12 STI base at lows. (Reaffirmed several time throughout the session as remaining on watch for short ops, incl. at 14:08 ET.)

STI Short Setup


12:50 ES resistance is 1336.75 ES holds this by two ticks.

ES Resistance


13:02 CRS basing at lows. Remainder of this position was stopped out.

CRS Short


And that's all for today folks!!! I will try to update this every day, but please forgive me if I am not able to (2 kids and other projects to work on!). For those that stop by the room, you can also turn on logging to save transcripts for review under the mIRC options. Take care and have a wonderful evening! Time to go for a stroll with the munchkins and then will get you guys the Market Action Letter for today. Later!!!

Toni's Trade Wrapups - Introduction

Hey gang... I often have people wondering what we are trading in the live trading room each day. I usually give about half a dozen things and will start to attempt to keep them updated here. Sometimes things such as swingtrades are good for entries into the next day and have not triggered during the day given, so this will be a good chance for those that are not around at the time to catch up.

For those that are new, a quick introduction is that those stocks posted early on have great daily charts and we are looking for setups in the direction of the gap or bias as posted. Otherwise, stocks basing at highs are for longs on breakouts and stocks basing at lows are for shorts on breakdowns. Any other patterns will be posted with a link for what the pattern looks like and how to trade it.

The breakout template used for the room is the one I created several years ago and is located at http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif. The following are only the positions and stocks I have given, although other traders also post throughout the day.

Some of these updates will be more detailed than others, depending upon how much time I have in the evening to post. Some I will show with some charts to help familiarize you with the types of setups given and how to trade them. I also post the major support and resistance levels for market reversals throughout the day for EMini traders, but given time limits I won't be updating those everyday. Hey, I do this in my "free" time (what there is of it haha!).

The room is free, so please feel free to stop by. The link is as follows: http://www.tradingfrommainstreet.com/roomsetup.html


All my best,
Toni

Market Suffers a Blow When GE Disappoints

Good day! The market suffered a strong setback on Friday when the recent strength gave way to a strong breakdown set in motion by a disappointing quarterly report from General Electric Co. (GE). GE reported that profits fell 6%. It said that its financial-services divisions bore the greatest responsibility for the shortfall, citing the U.S.'s slowing economy and the challenging capital market. GE's wide reach into other sectors, such as entertainment, manufacturing, and health care have increased market concerns. In addition to the earnings shortfall, GE has lowered its forecast for the year as a whole. The news came as a surprise, fueling concerns over what's to come this earnings season. GE lost 12.8% on the day. This was its greatest one-day decline since the 1987 stock market crash.

The market opened significantly lower on the heels of GE's blow. Typically the extreme gaps in the market, such as the one which took place on Friday, will fill within the first several hours of the day. To do so, they must begin that ascent within the first 15 minutes of the regular trading session. Otherwise, they are most likely to hold the gap and experienced continued weakness throughout the session.

The market had begun to show some signs of a recover attempt even before the opening bell, primarily in the S&P 500. The index futures had started to round off at lows, creating a momentum reversal pattern. The pattern held into the opening range, but the market was not able to move higher within the first 15 minutes of the day, creating a larger concern that the opening weakness would cloud the market's performance throughout the day.

The S&P 500 held the momentum reversal pattern, offering a decent setup heading into the 10:15 ET correction period. Although the S&Ps hit the first target on this pattern at 10:45 ET, based upon a plethora of resistance such as Wednesday and Thursday's lows and premarket levels, it was not able to push through that level. The resistance held and the indices began to reverse course, giving way to the larger odds that since the gap did not begin to close within 15 minutes that the bears would control the session.

The market shifted slightly into 11:00 am ET. It held congestion, however, until noon. Volume was light as the market attempted to hold up, but this simply meant that even though prices were moving slightly higher, there were not many willing to commit to it. At 12:15 ET the shift in momentum was very apparant. The Nasdaq was forming a short pattern and the S&Ps and Dow were also holding the lower end of the morning channel. This channel broke quickly, confiming the bearish bias for the afternoon.

The 12:30 ET correction period held as the Nasdaq hit support from Wednesday's lows. The market was unable to find any relief other than a stall in the selloff. Volume was light as the market rested within a congestion zone along the day's lows. When the 5 minute 20 period simple moving average hit at about 13:30 ET it triggered the next phase of selling. From that point onward the indices did not have as clear cut continuation patterns, but the market held the 5 minute 20 sma as resistance and continued lower in a steady trend into the close.

The breakdown on Friday signaled an end to the uptrend that had been in play since Bear Stearns (BSC) crashed on the announcement of its buyout by J.P. Morgan Chase (JPM) on March 17th. Investors had hoped that the worst was behind them, but the momentum on Friday has triggered what could very well be a two-wave continuation pattern on the downside on the weekly time frame in the indices. The Nasdaq is going to have the best time trying to defy those odds, but the door has been opened for the S&Ps and Dow to make new lows over the summer.

In order to break this latest pattern, the market would have to chop lower for several months, overlapping price levels a great deal along the way. I do not think this is highly probable. On the plus side, since we are now in earnings season, a lot of individual stocks should offer strong momentum moves in response to earnings to play with. Earnings season will accelerate on Thursday. I will be much more cautious on anything longer term on the bullish side though for the time being until we begin to see how this pullback continues to play out.

The Dow Jones Industrial Average ($DJI) lost 256.56 points on Friday, or 2%. It closed at 12,325. The only one of the Dow 30 to stay in positive territory on Friday was WalMart (WMT), and that was only with a 0.24% gain. The S&P 500 ($SPX) lost 27.72 points, which also amounted a 2% decline on the day. It closed at 1,332. Safeco Corp. (SAF) (+2.39%), Clear Channel Communications (CCU) (+1.90), and Bed Bath & Beyond (BBY) were the top leaders. GE, Circuit City (CC) (-8.02%), and Countrywide (CFC) (-7.72%) were top losers. The Nasdaq Composite, which had the strongest upside in the prior session, had the most to loose. It fell 61.46 points, or 2.6%, and closed at 2,290. Among the top leaders were Fastenal Co. (FAST) (+4.06%), UAL Corp. (UAUA) (+2.23%), and BBBY. Some of the largest decliners were Nvidia Corp. (NVDA) (-6.70%), LAM Research (LRCX) (-5.86%), and Intuitive Surgical Inc. (ISRG) (-5.74%).

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, April 14, 2008
8:30a.m. Mar Retail Sales. Previous: -0.6%.
8:30a.m. Mar Retail Sales, Ex-Autos. Previous: -0.2%.
10:00a.m. Feb Business Inventories. Previous: +0.8%.

Tuesday, April 15, 2008
7:45a.m. ICSC Chain Store Sales Index. Previous: +0.7%.
8:30a.m. Mar Producer Price Index. Previous: +0.3%.
8:30a.m. Mar PPI, Ex-Food And Energy. Previous: +0.5%.
8:30a.m. Apr NY Fed Manufacturing Index. Previous: -22.23.
8:55a.m. Redbook Retail Sales Index For Apr 12. Previous: +1.6%.
9:00a.m. Feb Treasury International Capital Flows. Previous: $47.2B.
1:00p.m. Apr NAHB Housing Market Index. Previous: 20.
5:00p.m. ABC/Wash Post Consumer Conf For Apr 13. Previous: -34

Wednesday, April 16, 20087:00a.m. MBA Mortgage Refinancing Index. Previous: +3.4%.
8:30a.m. Mar Consumer Price Index. Previous: +0.2%.
8:30a.m. Mar CPI, Ex-Food And Energy. Previous: +0.2%.
8:30a.m. Mar Housing Starts. Previous: -0.6%.
8:30a.m. Mar Industrial Production. Previous: -0.5%.
8:30a.m. Mar Capacity Utilization. Previous: 80.9%.
2:00p.m. Federal Reserve's Beige Book.

Thursday, April 17, 2008
8:30a.m. Initial Jobless Claims. Previous: -32K.
10:00a.m. Mar Conference Board Leading Indicators Previous: -0.3%.
10:00a.m. Apr Philadelphia Fed Business Index. Previous: -17.4%.
10:00a.m. DJ-BTMU Business Barometer For Mar 29. Previous: -0.2%.

Friday, April 18, 2008
There are no economic indicators scheduled for today


Key Earnings Announcements This Week:

Monday, April 14, 2008
Before: BLK, SCHW, ETN, WERN, GWW
After: AMLN, ELS, INFY, JBHT, STLY

Tuesday, April 15, 2008
Before: ADTN, BKRS, BHP, FRX, GMTN, IIIN, JNJ, JOSB, LCBM, MTB, MI, MTOX, NTRS, OXPS, PII, QXM, RF, STT, SVU, USB
After: CHB, CSX, HCSG, INTC, LLTC, RLRN, RUSHA, STX, SORC, SPSN, WM

Wednesday, April 16, 2008Before: AMB, AMR, ASML, BMI, KO, ITW, JCI, JPM, NITE, LUFK, EDU, PJC, SSW, STJ, MDCO, WFC, WWW
After: ALTR, ATR, AVCT, CAVM, CNW, CCK, DTLK, EBAY, GILD, GKK, IBM, ISIL, KMP, KNX, LEG, RMBS, SOV, TER, UFPI

Thursday, April 17, 2008
Before: SMLC, AMFI, ECOL, AM, APH, BK, BAX, BBT, BGG, CHKP, CIT, CMA, CBH, CY, DHR, DSL, FCS, FHN, GPC, HOG, HSY, HNI, RX, IGT, JRC, KEY, LSTR, MAR, MMR, MEG, VIVO, MER, MLAN, MEH, NYT, NOK, NUE, ORB, PFE, PNC, BPOP, PPG, RS, SGP, SHW, SLM, SON, LUV, SPNC, SXCI, BRLC, AMTD, TTEC, TXT, UTEK, UTX, USK, WSO
During: HTLD
After: AMD, DOX, ARNA, BKUNA, CHP, COF, CX, GRRF, CYN, CTCT, CPSS, CBST, CYBS, CYT, ETFC, FNB, FCF, GOL, GOOG, HIFN, ICUI, INFA, IUSA, INPC, ISRG, KKD, LHO, MCGC, MELI, MHK, MGI, PKTR, PNFP, LGBT, PGI, QMED, RLI, SNDK, SEP, SYK, SRDX, TEK, TPX, TMA, UB, VASC, ZION

Friday, April 18, 2008
Before: ACO, CAT, C, HON, MAN, NVR, PRSP, SLB, WB, WL, XRX
After: WIT

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 Rally Falters in Afternoon Trade

Market Rally Falters in Afternoon Trade

Good day! Most sectors finished in positive territory on Thursday after strong upside momentum throughout the morning's trade, giving us the morning rally we had been looking for heading into the day. The session had began rather mixed. The Nasdaq was strong and the Dow also opened higher, but the index futures had fallen around 4:00 am, taking back the earlier evening's gains and the S&P 500 had trouble holding on. Ahead of the open some economic data shook things around a little bit. The U.S. trade deficit has widened dramatically, while weekly jobless claims fell 53,000 to 357,000 last week.

Although the futures were rounding off at the premarket lows, they still managed to pull back one more time out of the open. The S&P 500 ($SPX), which was the weakest of the three, moved all the way back for a retest of Wednesday's lows where it finally found support. The stronger Nasdaq Composite ($COMPX) held the 5 minute 20 period simple moving average. These support zones hit at 10:00 ET and from that point forward the morning was under the command of the bulls.

The indices barely paused to breathe between 10:00 and 11:00 am ET. Small continuation patterns off resistance levels lasted only a matter of minutes before buying set in once again. It did not take long for the indices to recover a substantial portion of the week's earlier losses. The momentum began to slow around 11:00 am ET, but this reversal pattern off lows made it unlikely that the remainder of the day would experience another strong trend.

The indices rounded off at highs over mid-day on Thursday. The Nasdaq had taken back about 62% of the week's losses, hitting Fibonacci resistance at highs, while the S&Ps reclaimed approximately 50% of the prior three day's losses. Although the market was rounding off, my bias remained primarily range bound with expectations that the market would hold onto the majority of the move off Wednesday lows. There were still some strong moves on the 5 minute time frame as the afternoon passed by. It was enough to offer futures traders some decent setups since support and resistance levels and trend action was very orderly.

The S&Ps and Dow both displayed the greatest weakness in afternoon trade, but then again, the only sectors to post losses on Thursday were concentrated on the NYSE in telecommunications, oil, utilities, banking, and particularly in the broker/dealers. The strongest sector was biotechnology, which is heavily concentrated on the Nasdaq. The biotechs gains nearly 5% in Thursday's trade on average. Other technology-related sectors also posted strong gains. Additionally, the airlines made a nice recovery, adding nearly 3% on average after sharp downside on Wednesday.

When the closing bell rang on Thursday the Dow Jones Ind. Ave. was still up 54.72 points, or 0.44%. It finished at 12,581.98. INTC, HD, MRK, IBM, DIS, UTX, DD, and HPQ all gained more than 1%. Although AA was the only stock to close lower by more than 1%, JPM came close. The S&P 500 rose 6.06 points, or 0.45%, and closed at 1,360.55. The Nasdaq Composite climbed 29.58 points, or 1.27%. It closed at 2,351.70. Stocks gaining over 5% on Thursday included ROST, UAUA, AMGN, PETM, and ISRG. XRAY and ESRX were among the top losers. Meanwhile, the Russell 2000 also posted strong gains. It rose 9.04 points, or 1.29%, and closed at 707.42.

On Friday the market is favoring congestion in the morning, followed by upside once again into the afternoon. Monday's highs will serve as the resistance zone in both the Dow and Nasdaq Composite, while last Wednesday's and Thursday's highs will be strong resistance for the S&P 500.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Correction Gains Momentum

Good day! Heading into Wednesday's trade, we were looking for the range to open up and for a continuation of the correction stage of the market which began on the 2nd in terms of a slowdown in upside activity, and really got under way on Monday afternoon with a pullback in price. Tuesday's session was quite narrow and very choppy, making the odds higher for stronger trend action on Wednesday. This began right away out of the open. The indices had gapped slightly higher, but the 15 and 30 minute 20 period simple moving averages, which were resistance the prior day, continued to hold and the market began to sell off just minutes ahead of the opening bell.

At about 10:00 am ET the market began to fall into its first congestion of the day. That congestion tried to break lower initially at 10:30 am ET when it was announced that crude inventories had fallen, leading to a new record high in crude futures at $112.21/barrel. It closed at $110.87/barrel. The breakdown attempt was a bit too early given the morning drop thus far, however, so the congestion continued with the 5 minute 20 simple moving average serving as resistance at 11:00 ET. Another strong breakdown followed into noon.

The second congestion move of the day took place heading into the early afternoon. With a downtrend firmly in place and the 5 minute 20 sma as resistance, it did not take much for the bias to remain on the bearish side. Volume dropped as the indices congested, supporting the bears through a lack of buying despite slight upside price movement.

Even though the Dow and S&Ps established new intraday lows into 13:00 ET, the prior 5 minute lows held as support on the Nasdaq and a longer congestion move formed into the 14:00 ET correction period. This is a typical time of the day for a late day move to occur and it corresponded to the 15 minute 20 sma once again. Volume had also remained light going into that resistance level, making it every easy for the bears to remain in control.

The downside into the final two hours of trading experienced a momentum shift that had not been seen earlier in the session coming off support levels. After making only slightly lower lows in the S&Ps and Nasdaq, the slowdown in the selling was enough to create a reversal pattern into the final hour of trading. The S&Ps and Nasdaq had both established three intraday lows, hence exhausting the intraday downtrend, and the Nasdaq had also hit equal move support on a 15 minute time frame as compared to the drop into Tuesday's lows. The 15:00 ET correction period helped as well.

I had looked for 1351.5 to hold as support on the ES (S&P 500 EMini). It was close though with a low of 1351.25. Notice how the ES and YM both hugged the 5 minute 20 sma before breaking higher into the last hour of trade. This is a key trait for a strong reversal. The stage was set for a rally into the close. It actually continued well past the closing bell, but the market was able to regain some of its intraday losses. The Dow closed lower by 49.18 points, or -0.4%, at 12,527. The S&P 500 lost 11.05 points, or -0.8%, and ended the day at 1,354. The Nasdaq Composite was again hit the hardest, falling 26.64 points, or -1.1%, to close at 2,322.

In the news, UPS (UPS) (-3.7%) cut its first-quarter earnings expectations, citing a weak economy and rising fuel costs. This led to widespread weakness in the transportation sector. The Dow Jones Transportation Average fell 3.52% on Wednesday. Even harder hit were the airlines. The Amex Airlines Index lost a whopping 5.24% with JetBlue (JBLU) down 6.4% and Continental Airlines (CAL) down 7.6% by the closing bell. The PHLX Housing Sector Index was another exceptionally poor performer, falling 3.87%. The Amex Gold BUGS Index, however, rose 2.02% and the PHLX Semiconductor Index also climbed, rising 1.54% on the day.

The market is looking bullish into the open on Thursday. The 60 minute time frames were all hitting support Wednesday afternoon and favoring a larger bounce off those support levels. This bias will be minimized if the indices manage to gap significantly higher, since larger than average gaps tend to fill within the first two hours. On the whole, however, I will be favoring the bulls for the first half of the day at least. 12600 will be Dow resistance, with 2350 as resistance in the Nasdaq Composite.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Gradual Ascent Gives Way to Selling Pressure

Good day! Tuesday was one of the narrowest and most choppy sessions the market has seen in months. Volume was light despite the modest downside gap, which would typically bring in additional volume. This suggested that despite the size of the gap, the bulls were not overly concerned, nor were the bears quick to jump. Instead the general mood was "wait and see."

Large gaps in the market overall tend to begin to close within the first 15 minutes of the day. The market maintained this bias on Tuesday as well, but the upside out of the opening bell was not very convincing. The Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) both established three waves of buying on the 5 minute time frame before hitting resistance at the 10:45 ET correction period, but the upside was not very steady and prices experienced a strong degree of overlap from one bar to the next on the way. While my bias was bullish out of the open as I expressed in the prior evening's column, I stayed away from the indices themselves and focused upon individual equities instead in order to avoid the volatility.

The market continued to hold up as the morning progressed. It took another 45 minutes for the Dow to close its morning gap. The Nasdaq and S&Ps also played around in the zone of Monday's close while momentum on the upside shifted. This was most noticeable in the Nasdaq which crept higher into 11:30 ET before giving way to a strong pullback off the 15 minute 20 period simple moving average. This same resistance level also held in both the Dow and S&Ps and helped the market turn lower going into the afternoon.

Even though the market reversed course, it still ran into the same trouble it had on the upside for the most part. After the initial 20 minutes of downside the indices fell into a congestion zone. It crept somewhat lower into the opening price level around 13:30 ET, but trade remained on the choppy side. The 5 and 15 minute 20 period simple moving averages held as resistance with the indices sliding down them throughout much of the afternoon. A strong drop took place following the 14:00 ET FOMC Minutes, but even the Fed's lack of enthusiasm (to say the least) about the economy failed to lead to a sustained selloff.

The market took back a lot of the early afternoon losses in the Dow and S&Ps in the final 90 minutes of trade. The Nasdaq had a more difficult time. Although the Dow and S&Ps closed above their opening levels, the Nasdaq was relatively unchanged from its open. The Dow closed at 12,576.44, lower by 35.99 points, or 0.3%. The S&Ps ended the day at 1,365.53, down 7 points, or 0.5%. The Nasdaq Composite lost 16.07 points, or 0.7%. It closed at 2,348.76. The market remains in a corrective stage on the daily time frame heading into Wednesday. The 20 day sma is still going to be support. The market should open up, however, as compared to Tuesday's action and offer some more decent intraday moves.

Semiconductors (-2.77%), housing sector equities (-2.37%), and banking stocks (-2.15%) were the worst performing sectors on Tuesday. Oil-related equities (+0.75%), natural gas (+1.56%), health care (+1.72%), and airlines (+0.41%) led on the upside.

On the news front, the National Association of Realtors reported data on pending home sales at 10:00 ET. The index for sales contracts on previously owned homes was down 1.9% in February. This is 21.4% lower than February of last year. January's levels, however, were revised slightly higher, which took some of the sting out. The South remained the hardest hit, falling 5.5%, while the Northeast saw an increase of 3.2%.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Market Inches to New Highs Intraday, but Remains Relatively Range Bound

Good day! Market action was choppy on Monday as the indices attempted to push higher, but struggled with last week's range. The session began with a strong upside gap following a steady trend higher in Sunday's futures session and an early morning breakout in premarket trading on Monday. The gap and opening trade action led to a retest of Friday's highs in both the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI), while the Nasdaq Composite ($COMPX) also found resistance from the prior 5 minute highs on Friday. These resistance levels, along with the extent of the gap, made it very difficult for the market to continue higher right away out of the open and a corrective move began on the 15 minute time frame which lasted for the first half of morning trade.

Initial support hit in the indices at about the same time as the 9:45 ET correction period. The Nasdaq popped enough off these levels to retest the premarket highs, where the Nasdaq futures found resistance once again. This created a new intraday high for the index, albeit a minor one. The S&Ps and Dow, which had already been further extended, held earlier congestion and the intraday highs. They rolled over once again at approximately 10:00 am ET, coming off the 5 minute 20 period simple moving average on the all sessions time frame.

Two waves of selling on a 5 minute time frame brought the three indices into support once again at 10:30 ET. At this point they were hitting the 5 minute 20 sma intraday, as well as the 50% retracement level in the S&P 500 and 62% retracement level in the Dow and Nasdaq. These levels are based upon the rally off Friday's afternoon lows and into the morning highs. Fibonacci levels hold very well in the indices and can be extremely helpful in timing intraday corrections and reversals. In this case, it meant support for the morning's lows.

For the remainder of the morning the indices climbed higher. They retraced 62% of the selloff, stalled for about 20 minutes at 11:00 ET, and then continued at a steadier pace pace into and beyond the morning highs. The move lasted until 11:45 ET. At that point the Nasdaq was hitting Friday's highs, stalling the buying once again. The Russell 2000 also found resistance at this zone, hitting 10:00 ET highs. The Russell 2k had been lagging throughout the day and was the only index of the four to close its morning gap around 10:30 ET.

The market held the highs and price resistance for nearly an hour, basing steadily on declining volume. This created a nice bull flag forming as the indices approached their 5 minute 20 period simple moving averages for support. They broke higher once again right after 12:30 ET. The S&P 500 led the move, pushing quickly into the -38% retracement level from the move off Friday afternoon lows into the morning highs. This level held to the tick and the market turned around once again, gaining momentum on the selloff with the Nasdaq leading the downside.

Since the bull flag was not able to hit a move equal to the prior 5 minute rally and the momentum on the pullback off the resistance was on the strong side with the resistance hitting on multiple time frames, the odds were very strong that the market had seen the highs of the day. My bias flipped quickly to the bears, focusing on a move lower for the remainder of the afternoon.

The market was actually quite strong on this downside. Once it began to selloff it didn't even manage to make it back to the 5 minute 20 sma on any of the corrections and instead only formed continuation moves on a 5 minute time frame. Volume spiked with some initial support at the Nasdaq prior lows at about 14:30 ET, but a bear flag took the indices into new intraday lows at 15:00 ET. Continuing the trend of Fibonacci levels holding well, both the S&P 500 and Dow sold off until hitting their -138% retracement levels from the late morning uptrend. This strong support allowed the market to hold those lows into the closing bell.

Once again the market remained relatively unchanged on the day despite the intraday swings. The Dow gained 3 points, closing at 12,612.43. The S&P 500 rise 2.14 points and ended the day at 1,375. The Nasdaq Composite closed lower by 6.15 points at 2,366. As we head into Tuesday's session, the market is favoring a bit of upside in the morning, but the larger bias is now somewhat more bearish due to the series of slightly higher highs on the 60 minute time frame. The 20 day sma will still remain support.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Server Side vs Client Side Brokers

Regarding a question sent via email:

Hey ----,

I think what you are asking is in terms of the platform type. Some execution platforms will store your order information on your own computer as opposed to on their servers. So, if your internet goes down or your computer gets turned off, or even if your browser just gets closed accidentally, then your order is lost and will not be executed. If the order is server side, however, you have greater protection in terms of being able to keep stops in play as well as orders for protecting gains, etc. Most brokers these days are now server side, but it certainly never hurts to ask to be on the safe side!

All my best,
Toni

Live Trading Room Question

Question:

Hi Toni,

I was reading your Position Trader and it mentioned your live trading room. Will I find out more about thetrading room in the DVD course (which I'm going totake right after I finish Richard Arms's latest book)?

Do you trade the eminis in your live trading room?

Thanks.

Answer:

Hey,

No, I really don't talk about the room at all! haha! The room is totally free though, so please feel free to stop by! The link is as follows: http://www.tradingfrommainstreet.com/roomsetup.html Yes, I do trade EMinis in it.

When I post resistance levels I am looking to short, and I am looking to buy when posting support levels. When applicable, I will also post the type of setup I am using.

A summary of the most common setups can be found at http://www.tradingfrommainstreet.com/techanalysis.html.

All my best,
Toni

Broker, Trading Platform, and Indicators

Questions:

Hello Toni,

I have tried several "systems" without results. Therefore I am leary in entering others. But there is curiosity:
What commodity broker do you use?
Do you use their trading platforms?
What indicators do you use?

Thanks!

Answer:

Hello,

I use Interactive Brokers for my brokerage firm for both commodities as well as equities. I do not use their charting platform, however, since it's still rather limited. Instead I use Real Tick from Townsend Analytics.

In terms of indicators, I use very few. I rely primariily upon price and volume activity. When trading EMinis I will refer to the Fibonacci retracement levels. I often will use a 20 and 200 simple moving average intraday as well. On a daily time frame I will add a 10, 50 and 100 day sma. These are the only indicators I use.

All my best,
Toni

Links to a series I wrote on Fibonacci:

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

Swingtrade Newsletter

Question:

Hi Toni, Do you offer a swingtrading newsletter?

Answer:

Hi!

I have not published one for a couple of years simply due to time contraints. I do have a weekly newsletter which you can join on the home page of http://www.tonihansen.com. It is currently free and does include swingtrades from time to time, although the focus is more upon holding for several weeks to several months.

I also post swingtrades in the live trading room I have. There is a link with login instructions at http://www.tradingfrommainstreet.com. Be warned, however, that most of the activity in there is for daytrading, so it may not be worth the time commitment to monitor it. I post several swingtrades per week on average. The room is free.

RSTI on the 28th and ITRI on the 1st were the last two swingtrades I gave, since I was not in much of last week due to my kids being home on spring break.

I am looking at adding a swingtrade letter once again around the end of the summer since I've always had great success with it. If you are on my email list then you will start receiving them automatically when I begin them again.

All my best,
Toni

Struggling with EMinis

Question:

Dear Toni, I have been trading the EMinis live for about a month, but am struggling to achieve any success. How can you help?

Answer:

One thing to keep in mind is that EMinis do tend to be more difficult to learn than securities. If you have enough capital, I would recommend beginning with them and then making the switch once you are consistent. You can also then trade the QQQQ, SPY, or DIA in smaller risk increments using the futures triggers to begin to ease back into trading futures.

If this is not an option, then consider trading with a simulated account until you are comfortable with your performance level and then begin to trade with only 1-2 contracts, starting with the NQ since it will tend to have the least risk for comparable setups.

No matter what form you security you are trading, however, there is a substantial learning curve. It takes most people at least 6 months to show any real signs of consistency and several years before they are comfortable with their performance. This learning curve is the reason most people fail. They do not come into trading adequately prepared to struggle for that long before they make it. Another reason of course, is that they begin trading without a solid understanding of how to read price action and decide to "wing it".

Even when a novice decides to pursue education, there are so many resources out there, often contradictory, that it can take time to weed out the garbage from those sources which are actually legitimate. Take it slow and be sure to really test out your system before going live. Trading systems can be profitable for weeks to several months and still not be adequate for longer term success, so go slow even after you go live and gradually increase risk over time.

All my best,
Toni

Market Closes Mixed on Friday, but Advances on the Week

Good day! The market posted nice gains last week. Although most of those gains were made early on with a strong gap and trend day Monday with continuation into Tuesday morning, the S&P 500 ($SPX) and Nasdaq Composite ($COMPX) still closed higher on Friday as well.

After a mixed session, the Dow Jones Industrial Average ($DJI) was the only one of the top indices to close lower, but it did so by only a hair, losing 16.61 points, or 0.13%, to close at 12,609.42. On the week as a whole it rose 3.2%. The S&P 500 gained 1.09 points, or 0.08%, and closed at 1,370.40. It gained 4.2% last week. The Nasdaq Composite performed the best, gaining 7.68 points, or 0.33%. It closed at 2,370.98, up 4.9% on the week with technology leading the market. Finally, the Russell 2000 ($RUT) added 0.16 point or 0.02%. It closed at 713.73 on Friday.

There were not a lot of standouts in terms of sector performance on Friday. The leaders were in biotechnology, pharmaceuticals, commodity related equities, and oil services. The AMEX Biotechnology Index, which was the strongest sector, rose 1.82% on Friday. Telecommunications, broker/dealers, banking, and housing related equities were the poorest performers as a whole. The Philadelphia Banking Sector was the weakest, losing 2.22%.

The index futures were trading higher in premarket action on Friday, breaking out of a range around 7:00 am ET. At 8:30 am ET, however, March employment data hit the wires and the futures quickly reclaimed the earlier gains. The Labor Department reported that nonfarm payrolls fell by approximately 80,000 in March. This is the largest decline since March 2003. Economists were expecting payrolls to fall by about 60,000. Adding to the disappointment was a revision lower by 67,000 in January and February payrolls. This was the 4th consecutive monthly loss for private sector payrolls. The economy has lost an estimated 232,000 jobs on the year to date.

The only sectors to add jobs last month were education, government, mining, and food services. Positions in manufacturing dropped by the largest number since July 2003, while General Motors Corp. (GM) reflected losses in the motor-vehicle sector. It fell 4.7% on Friday when word hit that a plan to help auto-parts manufacturer Delphi Corp. (DPHIQ) emerge from bankruptcy fell through.

As payrolls fell, the country's unemployment rate climbed to 5.1% last month. This is the highest it has been in over 2 1/2 years. Federal Reserve Chairman Ben Bernanke had given testimony last Wednesday on the state of the economy, expressing a view that, while a recession was possible throughout the first half of this year, they are expecting things to turn around over the summer. Of course, who really expects the Fed to truly express any negativity as far as the economy is concerned. It appears that the recession which they deem possible is already well underway. Friday's jobs data is going to be factored into this month's upcoming federal funds interest rate decision and has increased speculation of yet another rate cut coming out of this month's two-day meeting on April 30th.

Although the market opened relatively unchanged on Friday despite the weak jobs data, the indices continued to digest the news following the open. The market congested for the first 30 minutes of the day, but then broke lower once again out of 10:00 am ET. It fell sharply for about 15 minutes, but then the momentum began to shift. After retesting the lows on a 2-5 minute time frame the market was able to turn back around. The S&P 500 and Nasdaq Composite had found support from Thursday's morning congestion, while the Dow hit support at Thursday's lows. These levels assisted the market recovery in the second half of the morning on Friday.

The indices were back at the morning highs by 11:30 am ET. At that point they began to pullback a bit off the intraday highs. The 5 minute 20 period simple moving average held as support, as did the 12:00 p.m. ET correction period. A second wave of buying kicked off on the 5 and 15 minute times frames into the early afternoon.

The upside was strong to begin with on Friday afternoon, but within 15 minute the S&Ps and Dow were hitting Thursday's highs. This resistance slowed the ascent, but it stalled for only about 15-20 minutes before the market again began to push to new intraday highs. This push gained momentum briefly into 13:00 ET, but the market was not able to sustain that pace. The market had hit the equal move zone as compared to the late morning rally, but it managed a third early afternoon push to complete a 5 minute trend move into 13:30 ET on the continuation. This move took the indices into equal move resistance on the 15 minute time frame as compared to Thursday's rally and the momentum shift on the 5 minute time frame, opening the door for a late day reversal Friday afternoon.

When the market turned, it did so rather quickly. The 5 minute 20 sma barely stalled the selling and the indices easily moved lower into earlier congestion and 5 minute highs for support at 14:30 ET. The 5 minute 20 sma then served as resistance and the light volume into that level allowed the market to continue lower into the final 30 minutes of trade, reclaiming most of the session's gains before the closing bell. Support once again hit with an equal move. This time it was on a 5 minute time frame on the downside. Each of these measured moves are shown in blue on the 5 and 15 minute time frames and offer very strong levels for both support, as well as resistance, within a trend when a continuation move is underway.

We are heading into the beginning of earnings season this week. Alcoa Inc. (AA), which traditionally kicks off earnings season, annouces after the closing bell on Monday. The indices are favoring a continuation of this relatively sideways congestion zone on th 60 minute charts as the week begins, but the market bias as a whole remains bullish at this point. The 20 day simple moving average in the indices is going to serve as support, but a gradual pullback into that level would be more favorable for continued upside as the month wears on.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Economic and Earnings Reports This Week

Economic Reports and Events This Week

Monday, April 7, 2008
3:00p.m. Feb Consumer Credit. Expected: $6.0B. Previous: $6.9B.

Tuesday, April 8, 2008
7:45a.m. ICSC Chain Store Sales Index. Previous: -0.2%.
8:55a.m. Redbook Retail Sales Index For Apr 5. Previous: +1.7%.
10:00a.m. Feb Pending Home Sales Index. Expected: -1.5%. Previous: Unch.
2:00p.m. FOMC Minutes.
5:00p.m. ABC/Wash Post Consumer Conf. Previous: -33.

Wednesday, April 9, 2008
7:00a.m. MBA Mortgage Refinancing Index. Previous: -38.1%.
10:00a.m. Feb Wholesale Trade. Expected: +0.5%. Previous: +0.8%.
10:00a.m. Crude Inventories

Thursday, April 10, 2008
8:30a.m. Initial Jobless Claims. Expected: -17K. Previous: +38K.
8:30a.m. Feb Trade Balance. Expected: $57.0B. Previous: $58.2B.
10:00a.m. DJ-BTMU Business Barometer. Previous: +0.1%.

Friday, April 11, 2008
8:30a.m. Mar Import Prices. Expected: +2.0%. Previous: +0.2%.
10:00a.m. Mid-Apr Reuters/U Mich Sentiment Index. Previous: 69.5.



Key Earnings Announcements This Week:

Monday, April 7, 2008
Before: CHINA
After: AA

Tuesday, April 8, 2008
Before: BKRS, CHTT, LAYN, MSM, QXM
After: ZZ

Wednesday, April 9, 2008
Before: ACGY, CC, GBX, ISCA, MERX, MTG, PGR, SGR
After: APOG, BBBY, CBK, WDFC

Thursday, April 10, 2008
Before: CAO, FCSX, FRPT, IART, PIR, RSTO, RAD, WCG
During: CBSH
After: DNA, INTV, LNDC, NINE, RVI, PAY

Friday, April 11, 2008
Before: FAST, GE
After: PKX

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!

ISE Webinar Logs - Identifying Trading Targets

Hey Gang!

I want to thank those of you that were able to make it to my
webinar on Tuesday on Identifying Trading Targets for the
International Securities Exchange. I know a lot of you did not
get the notice in time since only the reminder message was sent
in text format, while the original invite was in html (which was
blocked by some isps). In the future I will make sure that all
such invites are in text only and am sorry for the short notice
for those that did not receive the initial one. On the plus side,
all webinars for ISE are recorded, so if you missed it or wish to
view it again, the link is as follows:

http://www.ise.com/WebForm/viewPage.aspx?categoryId=361&header4=true&menu1=true&link5=true

I hope that you enjoy it! I have another one for them scheduled
for July 8th for those of you that want a serious heads up! =)

Take care and have a wonderful evening and remainder of the
trading week!

All my best,
Toni

P.S. If looking for some new reading material, please check out my
bookstore specials at my Trader's Library affiliate bookstore at
http://www.invest-store.com/tradingfrommainstreet/tl040108.html