Market Plunges Lower into Friday on GDP and Banking News

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

Hey gang! The market continued to plunge lower into Friday's opening bell after a predominantly downtrending session on Thursday. The indices based throughout most of the afterhours trade, but then broke sharply lower out of the 6:00 am correction period and continued a strong decline into 8:30 am ET. This offered a near-textbook breakdown setup in the premarket, although you have to be up quite early to catch it!

In premarket news, the Commerce Department made a sharp downward revision to the gross domestic product to a seasonally adjusted annual decline of 6.2%. The original estimate from last month reported a decline of nearly 40% less at a rate of 3.8%. The final revision, however, is still to come. If this number holds, then it will be the worst quarter since early 1982.

Dow Jones Industrial Average ($DJI)


The extreme gap into Friday morning held well with one of my favorite gap setups in the indices. The concept is simple. When the gap extends a previous day's trend or hit strong support levels on a downside gap or resistance on an upside gap, then mark the 15 minute highs and lows. Take a break in that trading range for a trade. With the gaps into the support or resistance and extended trends intraday, the best triggers will favor gap closures. Extreme gaps that trigger larger time frame setups will do the best when they go against the gap as continuation moves.

The Nasdaq had the least difficult time closing the opening gap. It managed to do so around 10:00 am ET. At the same time the Dow and S&Ps hit 5 minute 20 sma resistance. The pace off the lows into this resistance was stronger than average, so the reaction was mild to begin with. A slightly higher high on a 5 minute time frame allowed the market to form a 2T™ setup on the 5 minute time frame for a little bit of a larger price correction into the 11:15 ET correction period, but the upside then resumed into noon. This correction period held as resistance again with the Dow closing its morning gap and the indices again forming another 5 minute 2T™ into the early afternoon. This time the prices overlapped a greater percentage of the previous upside move on the 5 minute time frame and this began to show rounding off at the gap closure zone, which meant increased favor of an afternoon turn lower.

The reversal was confirmed after a slightly higher high in the S&Ps and Dow at the 14:00 ET correction period, which again turned the markets lower. The S&P futures didn't quite close the gap, but they did hit the lows from Thursday with this correction period. The pace then increased on the pullback into the final two hours of trade. The middle of the mid-day range served as resistance when the market bounced from 14:30 into the 15:00 ET correction period and a bear flag formed in the final 45 minutes of trade with the 5 minute 20 sma acting as resistance.

Even though the market didn't offer a lot of the technical patterns that you often see me post on the charts in this column, given the extended trend into the morning, it was not unusual to see a more choppy day of trade. This is particularly true given the current economic news environment and the fact that it was a Friday in such an environment, discouraging shorter term traders from holding over the weekend. Notice, however, that the correction periods intraday held extremely well. This takes place 15 and 45 minutes past the hour in the morning and shift from 11-11:15 am ET to begin to fall on the hour and half past in the afternoon. The corrections that occur on the hour are typically the strongest and tend to begin within 5 minutes of those time levels. These were all major turning points on the 5 minute time frames on Friday and served short-term traders quite well throughout the session.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended lower by 119.15 points, or 1.7%, at 7,062.93 on Friday. The Dow ended the month lower by 4.5%, down 11.7% for its lowest close since 1997. The February decline was the largest point drop on record and the second-largest percentage decline. The largest percentage decline took place in 1933 when it fell 15.6%. This follows the largest January decline on record. The Dow became the last of the three major indices to lose 50% since peaking in 2007. The S&P 500 had hit that retracement level on February. 19th, while the Nasdaq Composite hit it on Wednesday. The major averages in both Germany and Japan have also fallen 50% off highs, reflecting the global reach of the selloff.

Seven of the Dow's 30 index components still managed to close in positive territory despite the day's decline. IBM posted the largest gains, up 3.44%. Wal-Mart (WMT) gained 2.05%, while Caterpillar (CAT) rose 1.57%, and Home Depot gained 1.21%. The day's losses were led by the financials.

Citigroup (C) was the hardest hit and dominated the news front with a loss of 39.02%. The company announced a stock swap in which the government will likely end up owning more than a third of the company with its current position in preferred stock converted into common stock. While this is aimed at boosting confidence in the longevity of the company and the government's position to not let it go under since it puts the government in the same position as a common investor, it weakens the value of the stock for current shareholders and increases concerns about nationalization. Bank of America (BAC) also took a tumble, losing 25.75%.

Nasdaq Composite ($COMPX)


The S&P 500 ($SPX) fell 17.74 points, or 2.4%, and closed at 735.09. 371 of the S&Ps 500 stocks posted losses. For the week overall the index closed lower by 4.5% and it ended the month lower by 11%. This was also the second-worst February on record, with the largest February decline also taking place in 1933 by 18.4%. The close on Friday was the lowest one since December 1996.

Crude oil futures rose 15% this week, but fell 46 cents on Friday to end the week at $44.76 a barrel. Exxon Mobil (XOM) fell 4.3% on Friday, while Chevron (CVX) fell 3.9% after both had stabilized throughout the week with congestion along the recent lows. Neither of them appear to be done with their selling on the weekly time frames.

The Nasdaq Composite ($COMPX) lost 13.63 points, or 1.0%. It closed at 1,377.84. It ended the week lower by 4.4% and the month lower by 6.7%. Nearly half of the Nasdaq-100's stocks, which represent the largest Nasdaq stocks, managed to close higher. The index overall, however, still fell 10 points for a percentage loss of 0.9%.

The continued weakness was not much of a surprise for us since we identified the support, but remained concerned given the time of the year. When larger market moves take place, it is more often a high or low in March that holds and leads to a stronger correction than any reaction to support or resistance in February. A lot of market participants, however, have been waiting expectantly for a better reaction to the lows of 2002-2003 in the Dow and S&Ps and the break lower on Friday likely tripped a lot of stops for eager bottom hunters. We remain at that support zone, but the pace of the selling into that level allows the level quite a bit of give before we can call it broken. The Nasdaq is the only one of the three indices to not yet hit this pivotal technical level from 2002.

We are also still at the equal move zone on the daily time frame in the Dow and S&Ps. The Dow hit this support on the 24th, but the S&P didn't manage to test it as cleanly until Friday. The Nasdaq Composite still has a little bit of wiggle room and the push lower into Friday's close can help get it there. For the past several weeks the market has maintained a strong downtrend.

I suspect that we will see that trend shift this coming week, but unless the pace rounds off at lows with a series of slightly lower lows, then the reaction off the support will likely be a lot more gradual than the selloff has been. The lows from January's mid-month congestion will serve as the first major resistance on a daily time frame when the market starts to correct from the current downtrend. Keep in mind that next week is a pretty heavy one for economic data, so be sure to check the economic calendar when heading into each session. Although earnings are starting to lighten up, there are still a few big names due out as well, perhaps most notably American Intl. (AIG), which is expected to post a $60 billion loss for the fourth quarter.

Economic Reports and Events March 2-6:

Economic Reports and Events March 2-6:

Monday, March 2, 2009
8:30 a.m. Jan Personal Income: Expected: -0.3%. Previous: -0.2%.
8:30 a.m. Jan Personal Spending: Expected: +0.4%. Previous: -1.0%.
10:00 a.m. Jan ISM Manufacturing Index: Expected: 34. Previous: 35.6.
10:00 a.m. Jan Construction Spending: Expected: -1.8%. Previous: -1.4%.

Tuesday, March 3, 2009
7:45 a.m. ICSC Chain Store Sales Index For Feb 28: Previous: +0.6%.
8:55 a.m. Redbook Retail Sales Index For Feb 28: Previous: +0.9%.
10:00 a.m. Jan Pending Home Sales: Expected: -3.5%. Previous: +6.3%.
4:30 p.m. API Oil Industry Report For Feb 27
5:00 p.m. ABC/Wash Post Consumer Conf For Feb 28: Previous: -48.

Wednesday, March 4, 2009
7:00 a.m. Mortgage Application Refinance Index For Feb 27: Previous: -19.1%.
8:15 a.m. Feb ADP Employment Survey: Expected: -680K. Previous: -522K.
10:00 a.m. Feb Non-Manufacturing Index: Expected: 41. Previous: 42.9.
10:30 a.m. US Energy Dept Oil Inventories For Feb 27
2:00 p.m. Federal Reserve Beige Book

Thursday, March 5, 2009
8:30 a.m. Initial Jobless Claims For Feb 28 Week: Expected: -17K. Previous: +36K.
8:30 a.m. 4Q Productivity, revised: Expected: +0.8%. Previous: +3.2%.
8:30 a.m. 4Q Unit Labor Cost, revised: Expected: +4.7%. Previous: +1.8%.
10:00 a.m. Jan Factory Orders: Expected: -3.0%. Previous: -4.6%.
10:00 a.m. DJ-BTMU Business Barometer For Feb 21: Previous: -0.2%.
10:30 a.m. EIA Natural Gas Inventories For Feb 27

Friday, March 6, 2009
8:30 a.m. Feb Non-Farm Payrolls: Expected: -675K. Previous: -598K.
8:30 a.m. Feb Unemployment Rate: Expected: 8%. Previous: 7.6%.
3:00 p.m. Jan Consumer Credit: Expected: -$7.0B. Previous: -$6.6B.


Key Earnings Announcements March 2-6:

Monday, March 2, 2009
Before: ABM, ALD, ACAS, ARCC, ATPG, BPZ, CEDC, CMED, CCO, CNO, XTEX, XTXI, DISH, EIX, FNM (?), FCN, IART, KFNM NNI, OSG, PWRD, RDNT (?), RRI, ROSE, TTES, TWPG
During: -
After: TAST, EGLE, BAGL, FOE, FR, FELE, HPT, IMMR, IDCC, IPCM, IPCS, LF, MDR, PRX, PDLI, POM, SUNH, SUPG, SYKE, TIVO, VISN

Tuesday, March 3, 2009
Before: ACRMT, ARD, AZO, BIOS, BLT, BRKR, CRZO, CHS, DPTR, GVHR (?), HDIX, ISPH, ISLE, JTX, MBI, TYPE, NMTI, PCAP (?), SSW, SCR (?), SAH, SWSI, TECD, TSL, WATG
During: -
After: JOBS, ADCT, AVAV (?), BLDP, BEXP (?), GOLF, KCP, MASI, MOVE, NZ, TUTR, CLUB, OVEN (?), URS, PAY, VM, GB

Wednesday, March 4, 2009
Before: ALY (?), AFAM, BIG, BJ, BWS, COST, CXR, HEES, JOYG, KFY (?), MFB, MNC (?), NGS, NXG, PPCO, RHB, TOL, RMIX
During: -
After: TDSC, AIMC, ACLI, ARII, CWTR, CMTL (?), CPRT (?), CCRN, DAR (?), DXPE (?), DDMX, DIET (?), EXEL, FL, FCEL (?), GSX, GA, MATK, MMLP, MSSR (?), MCGC (?), MR, MRT (?), PETM, SONE, SCSS (?), SMTC, SINA (?), WTW

Thursday, March 5, 2009
Before: ALDN (?), ABV, ALOG, ARQL, ABG (?), FLY, BBI (?), CACH (?), CNQ, CMN (?), CPHL (?), CIEN, DK, ELMG (?), FRP (?), FLOW (?), FTEK, GCO, GRB (?), KSWS, LINC, MGM (?), MDS, NOVN, OMPI, OMRI (?), ORCH (?), PNK (?), PNCL, SHMR (?), SIRI (?), SIX (?), SXCI, TLM, USPH, URBN, WMAR (?), WNR
During: SNHY (?)
After: AIQ, ALJ, AIG (?), ARST, CPE (?), CDR, CLWR, COO, DEPO, DWRI (?), BOOM (?), EBS, FSYS, GOK (?), HLYS (?), HMIN, IDSY, ICXT (?), PODD, IPI, INXI, MRVL, MIDD (?), NCMI (?), ZQK (?), SNTS, SWHC (?), SMSI, STAA (?), STKL, SWIM (?), UDRL, VVUS (?), WIND

Friday, March 6, 2009
Before: HRB, PRFT, TSTY
During: -
After: -


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 Unimpressed with Obama's Budget Outline

Market Unimpressed with Obama's Budget Outline

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

Hey gang! The market wasn't very thrilled to learn of the Obama administration's budget outline which increases spending by 32%, leading to a deficit of 12% of the gross domestic product next year. This would be the largest since World War II. The plan includes letting the Bush tax cuts expire in 2011 as well as additional tax increases on those surpassing middle class wage earners.

Despite the news, the indices had been heading higher in premarket trade, but began to be brought asunder with the latest economic data showing an increase in first-time unemployment claims to 667,000 for the prior week. This was greater than expected and brings the number of those collecting unemployment to 5.11 million. In other news, durable goods orders shrunk 5.2% in January, providing further confirmation of a continuing economic slowdown. Even with this news, the indices still gapped slightly higher and they held up fairly well into the 10:45 ET correction period. Unsurprisingly, new-home sales dropped in January. They fell 10.2% to a seasonally-adjusted record low. Inventories of unsold homes fell 3.1%. While overall this is good news for real estate, it's still a record high supply that would span about 13.3 months of demand.

Dow Jones Industrial Average ($DJI)


The market slowly climbed back up into the previous day's highs on the S&P 500 and Dow Jones Industrial Average. This resistance hit with that 10:45 ET correction period and was accompanied by a shift in momentum. The pace slowed after a pop at 10:15 out of that earlier correction period. This allowed the markets to turn over very quickly off the previous high resistance level. The channel broke around 11:00 ET and it took only about half the time to take back the intraday gains as it did to make them. This kicked off what would end up as a trend day throughout the remainder of the session.

The mid-day moves on the downside held the 5 minute 20 period simple moving average resistance until about 14:00 ET. At this point the markets formed a longer correction with strong support at the Nasdaq's lows from Wednesday and the 5 minute 200 period simple moving average in the S&Ps and Dow, as well as prior 5 minute lows on both of these indices. The result was a lesser reaction to the 5 minute 20 sma and a longer base for a two-wave continuation pattern that triggered into 14:30 ET. This led to the strongest decline of the session. The longer base helped with this by allowing the indices to build up steam within the base. The lighter volume was another pro since it showed a lack of strong buying within the base.

Since the markets never managed any strong corrections off lows into a sharp test of the 15 minute 20 sma, the odds were very high that the market would try to close at or very close to the day's lows. This meant that even though the market attempted to pull higher in the final 45 minutes of trade, the 5 minute 20 sma was again able to hold and lead to another selloff into the closing bell.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended lower by 88.81 points, or 1.2%, at 7,182.08 on Thursday. The financials did well overall on further news from the Obama front that they would be working to stabilize and hold up the financial system, offering up the potential for an even greater monetary commitment of up to $750 billion. J.P. Morgan & Chase (JPM) led the Dow with a gain of 6.07%. IBM came in second with a 3.57% gain, but was followed by Bank of America (BAC) with a 3.10% gain. Only 8 of the Dow's 30 components closed with gains, however, and the losses were led by a 6.70% decline on Merck & Co (MRK). This was followed by a 6.67% loss on General Motors (GM) with large fourth-quarter losses, and a 4.07% decline on Kraft Foods (KFT). American Express (AXP) didn't fair as well as the rest of the financials and came in with a loss of 3.83%.

The S&P 500 ($SPX) fell 12.07 points, or 1.6%, and closed at 752.83. On the New York Mercantile Exchange crude oil futures closed higher by $2.72 a barrel at $45.22. The momentum has been shifting on the weekly time frame in oil since late last year and strong action over the past couple of weeks suggests that we will see this zone hold on these larger time frames for the first real rebound to take place since prices turned lower last July.

Nasdaq Composite ($COMPX)


The Nasdaq Composite ($COMPX) lost 33.96 points, or 2.4%. It closed at 1,391.47. The top Nasdaq 100 gainers were Applied Materials (AMAT) (+4.13%), Yahoo (YHOO) (+4.01%), Nvidia Corp. (NVDA) (+3.25%), and Foster Wheeler (FWLT) (+2.65%). Only 8 of the Nasdaq 100 closed with gains. The main losers were Nii Holdings (NIHD) (-19.89%), Amgen (AMGN) (-9.42%), Liberty Media Corp. (LINTA) (-8.15%), and Express Scripts (ESRX) (-8.13%).

Thursday's price action is consistent with the greater tendency for the market to wait until March before it shows a stronger correction or break of the trend that is in place heading into that month. This means we still have the potential for another new daily low even though the S&Ps and Dow are so far holding the equal move support zone on the daily time frame.

Dow Jones Ind. Ave. and S&P 500 Test Equal Move Targets at Lows

Dow Jones Ind. Ave. and S&P 500 Test Equal Move Targets at Lows

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Hey gang! First off, I want to thank all of you that made it out to my presentation on Monday evening in New York! It was quite a turn out! I'll be sending out a copy of the power point for the class this week, so keep an eye out for it!

The market finally got past its afternoon sluggishness this week. In fact, the swings throughout the session over the past several days have been extremely nice for daytraders. The 5 minute moves have been smooth and without a great deal of chop on either the up or downside. Monday kicked off with a gap up, but selling hit immediately out of the open and a strong downtrend took hold. This trend continued throughout the session and took the indices into the upper end of the daily target zone we had been following over the past several weeks. This amounted to an equal move zone hitting on the daily time frame in the S&P 500 and Dow Jones Industrial Average.

On Tuesday the markets rebounded with the strongest gains in over a month. The S&Ps had tested the November lows the day before and this served as a strong technical support level which fueled speculation of a low being established. We are still ahead of the typical reversal period in the markets though, so I wouldn't mind just one more minor test of lows, into perhaps the 7000 level on the Dow. March tends to be a much stronger month for market reversals, as well as breakouts from trading ranges.

The Dow Jones Industrial Average ($DJI) ended lower by 80.05 points, or 1.1%, at 7,270.89 on Wednesday. The index is down 16.2% so far this year. The early morning losses on Wednesday were extended by poor housing data in which the National Association of Realtors reported that existing home sales fell 5.3% in January. This was a much stronger decline than had been anticipated and prices fell near 6 year lows. The S&P 500 ($SPX) fell 8.24 points, or 1.1%, and closed at 764.90. The Nasdaq Composite ($COMPX) lost 16.40 points, or 1.1%, on Friday. It closed at 1,425.43.


Dow Jones Industrial Average ($DJI)


S&P 500 ($SPX)


Nasdaq Composite ($COMPX)

Dow Fast Approaches 2002 Low of 7197.49

Dow Fast Approaches 2002 Low of 7197.49

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Hey gang! I'm going to be in New York attending the Online Trading Expo this week. As a result, there will not be a column sent out Monday or Tuesday evening, but I will be emailing several educational pieces while I am away. If you happen to be in NY, please stop by Monday evening at 6:00 pm ET to attend my workshop: Fibonacci Trading Made Simple, at the Marriott Marquis in Times Square!

In Friday's session the market once again showed the cleanest movement intraday in the morning and the early afternoon. The action was actually quite similar to Thursday throughout most of the day main difference being in the pace of the movements. The indices gapped lower on Friday, as opposed to higher on Thursday, but they held that level to begin with. Throughout the morning on Friday the 5 minute 20 sma served as resistance. The indices turned lower within the first hour with two main waves of selling on the 5 minute time frame, just has had taken place on Thursday. The selling kicked off a bit later in the session though. While the market had established its two waves of downside by noon on Thursday, that same exhaustion point hit just after 13:00 ET on Friday before the indices slowly climbed back into the 5 minute 20 sma resistance level.

As in Thursday's session, the 5 minute 20 sma held for a relatively brief period of time before breaking higher. Unlike on Thursday, however, when the resistance level broke it did so very strongly. A lot of speculation had been taking place heading into Friday on the potential nationalization of several major financial institutions. The Obama administration, however, reassured the markets that it supported privately owned banking institutions.

Although stronger than the second wave of upside on Thursday afternoon, the rally still held the 5 minute 200 period simple moving average and the final 90 minutes of trade were again quite choppy. The shift in pace, however, allowed the indices to close up off their afternoon lows by holding the 15 minute 20 sma support and a 62% Fibonacci retracement of the afternoon rally.

Dow Jones Industrial Average ($DJI)


The Dow Jones Industrial Average ($DJI) ended the session down another 100.28 points, or 1.3%, at 7,365.67 on Friday for its worst week since early October. The losses for the week as a whole came to -6.2% in the Dow, which had hit an intraday low of 7,279.47. The 2002 low was 7,197.49. Only 6 of the Dow's components closed positive on Friday. They were led by the telecoms. Verizon (VZ) gained 2.93%, while AT&A climbed 1.68%. The opposite end of the spectrum was much more extreme. Citigroup (C) plummeted 22.31%. It was followed by an 11.50% decline in General Motors (GM) and a 6.76% loss in General Electric (GE).

Meanwhile, the S&P 500 ($SPX) fell 8.89 points, or 1.1%, and closed at 770.05 on Friday. The index fell 6.9% for the week. The financials fronted the morning losses, but a strong late afternoon reversal was led by this sector. Gold shares were very strong throughout the morning and early afternoon after gapping sharply higher into the open. The market fell throughout this time period, but when the market swung the other direction into the close gold reversed and pulled back. Gold futures still ended up closing above the $1,000 an ounce mark at $1,002.20 for April delivery for a gain of 2.6% on the day. It had hit intraday highs of $1,007.70. Although technically above $1k, this is still going to be a strong price resistance zone. The February gold contract hit an intraday high of $1,000.40 for a lesser push into that exact price resistance level. The momentum into this level will make it difficult for gold to pull back or correct sharply off these highs. Congestion or rounded highs as a corrective method are more likely.

S&P 500 ($SPX)


The Nasdaq Composite ($COMPX) lost 1.59 points, or 0.1%, on Friday. It closed at 1,441.23. The Nasdaq Composite fell 6.1% for the week, but the index suffered smaller losses than the rest of the market on Friday. Among the Nasdaq 100 ($NDX), INTU, FLEX, WYNN, APOL and AMAT all close with gains greater than 5%. This index closed higher by 5 points, or 0.4%, on Friday. Intel's (INTC) was the larger Nasdaq-100 gainer, up 12.79%. In that index, only ADBE, RIMM, and HOLX fell by more than 5%. Adobe (ADBE) lost 7.68%, while Research in Motion (RIMM) lost 6.99% to continue the breakdown we have been following over the past week.

In economic news, the Consumer Price Index remained unchanged in January compared to the same period a year earlier. This was the result of a 0.3% increase in January, following a 0.7% decline in December. The core CPI, which excludes food and gas prices, rose 0.2%. This was only slightly higher than expected. The core CPI is up 1.7% compared to a year earlier.

Nasdaq Composite ($COMPX)


My outlook remains the same on the daily and weekly time frames as it has throughout this past week. I still expect the Dow to have a strong chance of hitting at least the 7,200 level, which is the daily equal move support. The S&P 500 can easily follow suit and hit slightly lower lows of its own on the daily time frame since the momentum on this two-wave breakdown is very comparable to the early January selloff so far. If its slows, that target will be more difficult to test, whereas if the pace increases we can see a push even lower. As a reminder, March is the next main monthly correction period, so there is a good chance that we won't see any decent correction off the larger weekly and monthly support levels until then.

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, February 23, 2009
10:30 a.m. Feb Dallas Fed Mfg Production Index: Previous: -15.4.

Tuesday, February 24, 2009
7:45 a.m. ICSC Chain Store Sales Index For Feb 21: Previous: +0.9%.
8:55 a.m. Redbook Retail Sales Index For Feb 21: Previous: +0.9%.
9:00 a.m. Dec S&P/Case Shiller Home Price Index: Previous: -18.25%.
10:00 a.m. Feb Richmond Fed Mfg Survey: Previous: -49.
10:00 a.m. Feb Conference Board Consumer Confidence: Previous: 37.7.
4:30 p.m. API Oil Industry Report For Feb 20
5:00 p.m. ABC/Wash Post Consumer Conf For Feb 21: Previous: -49.

Wednesday, February 25, 2009
7:00 a.m. MBA Mortgage Application Refinance Index: Previous: +64.3%.
10:00 a.m. Jan Existing Home Sales: Previous: +6.5%.
10:30 a.m. US Energy Dept Oil Inventories For Feb 20

Thursday, February 26, 2009
8:30 a.m. Initial Jobless Claims For Feb 21 Week: Previous: unch.
8:30 a.m. Jan Durable Goods Orders: Previous: -2.6%.
10:00 a.m. Dec New Home Sales: Previous: -14.7%.
10:00 a.m. DJ-BTMU Business Barometer For Feb 13: Previous: +0.1%.
10:30 a.m. EIA Natural Gas Inventories For Feb 20

Friday, February 27, 2009
8:30 a.m. 4Q Preliminary GDP: Previous: -3.8%.
9:45 a.m. Jan Chicago PMI: Previous: 33.3.
10:00 a.m. End-Feb Reuters/U Mich Sentiment Index: Previous: 61.2.


Key Earnings Announcements This Week:

Monday, February 23, 2009
Before: AMSF, CPB, DDR, DCO, GLF, HMA, ICLR, ITRN, KDN, LECO, ORBK, VAL
During: -
After: AEIS, ARP, BIDZ, DRC, DTE, FST, FELE (?), GGP, HLS, HL, HTZ, IPAS, LOOK (?), MHK, JWN, OKE, OKS, ONXX, MALL, PSB, SENO, SM, TTEC, TXRH, NCTY, USNA, WLL, XFML

Tuesday, February 24, 2009
Before: ACOR, ALC, ASTE, BBG, CATM, CBRL, DAI (?), DAKT, DPZ, ETM, EEFT, EVVV, FE, FWLT, FDP, GVHR (?), GTI, HPY, HSII, HSIC, HNZ, HD, HURN, ICON, IPGP, M, MGA, MVL, MHS, MPEL, NCI, NRF, ODP, OWW, PKD, PCG, PWR, RDN, RSH, RIGL (?), SRE, JOE, SHOO, SMA, TLM (?), TGT, TASR, THC, TNC, TRI, UNT, UNFI, VRX, VPHM, VNO (?), WAB, WWE
During: CRDN
After: ALNY, APSG, CAR (?), BTUI, CRI, CBI, CPSS (?), CCI, DM, DWA, DY, ECLP, EDR, EPIQ, XCO, FADV, FSLR, GMKT, GUID, HCN, HEI, HLX, HLF, IAG, ICXT (?), IO (?), KNDL, MELI, NBR, ORA, PZZA, PRA, QCOR, RADS, RRC, SRSL, TEAM, TX, TIE (?), WYNN

Wednesday, February 25, 2009
Before: AER, ABK, CNP, GTLS, CMS, DLM, DNR, DIN, DISCA, DXYN, DLTR, RRD, EE, FSRV, FTR, GRMN, GEL, WOLF, HTV, ICTG, ISIS, SJM, KBR, LXP, MSO, MCCC, MNC (?), GAS, NWPX, OPTV, PEI, HK, POR, POZN, KWK, SKS, SPW, SRI, SYNO, NGLS, TFX, TJX, TWB, ZLC
During: FRPT (?)
After: ADLR, ANW, ACLI (?), AEL, ARNA (?), ARUN, AGO, ATN, AXTI, CWT, CBOU, CIR, CLF, COGT, DCI, EGLE (?), EQY, ESRX, DAVE, FLS, FLR, GNK, GMR, GA (?), ROCK, GDP, GEF, ICAD, TEG, IFSIA, KEG, LTD, MANT, MSSR (?), MCGC (?), MDAS, MCRI (?), MRT (?), NKTR, NTES, NUVA, OEH, PCR, PDGI, PXP, PPO, PSYS, QDEL, RRR, CRM, SVNT, SCI, STNR (?), TLEO (?), TS, TRLG, TYL (?), URI, USU

Thursday, February 26, 2009
Before: ACIW, AKNS, ALDN (?), ALO (?), AMT, ANSS, AWI, ABG (?), BRL (?), BRY (?), BVF, BCSI, BYD, BF.B (?), BRKR (?), CVC, CACH (?), CCC (?), LSE, CSE (?), CRZO (?), CDI, CKP, CBR (?), CNK, CCOI, CLR, CTB, CTCM, DLR, DRQ (?), DUF, DYN, EV (?), EP, EPB, EME, ELMG (?), EPL (?), ESV, FRP (?), FSS, FAF, FTO, FRO, GM (?), GLBL, GBE (?), HPT (?), HRP, HUN, IDCC (?), IGLD, VTIV, IRM, JMP, KG, LAMR, LLNW, LINE, LKQX, MIC, MPR, PCS, MGM (?), MDS (?), MSA, MINI, NDAQ, NGS (?), BABY, NIHD, NT (?), OMG, OCR, PNK (?), PNCL (?), PDC, RHD (?), RAS, RRI (?), RBA, RDC, SWY, SAFM, SHLD, SSW (?), SNH, SIRI (?), SONS, SUG, SRT, STXS, TSTY (?), TK (?), TDS, SNAK, USM, WTI, WNR (?), WATG (?)
During: LPX
After: AMCN, AIG (?), AHS, ANAD, ATHN, ADSK, BARE, BAS, BGCP, BGFV (?), BIO, BVN, CBEY, JRJC (?), CNL, FIX, CTV, CVA, DECK, DELL, DTSI, ERES, ESL, EXEL (?), FCH, FCN (?), GPS, GXDX, GERN (?), GCA, GKK (?), HANS (?), HT, HGSI (?), HYC (?), INSU, ITMN, INAP (?), KFN (?), KSS, LEAP, LAVA, ME, MEDX (?), MRX (?), MENT, MIDD (?), MOVE (?), MSCS, NABI (?), NVTL, NOVL, OCNW, OVTI, ORCC, PRX (?), PLLL (?), PCTI, PSA, NX (?), RSG, SD, SBAC, SGMS, SEAB (?), SNDA, BID, FIRE, BEE, SWN, SWIM (?), UHS, URS (?), YSI, UTSI (?), WRC (?), INT

Friday, February 27, 2009
Before: AYR, WTR, CDE, DT, DRH, EMCI, ENDP, IPG, IWA, JRCC, MGLN, MIR, SFL, TTI, PNX, TWP, WR
During: -
After: IART, NTLS, ROSE, TRMA


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.

Dow Closes at 6-Year Low

Dow Closes at 6-Year Low

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

Good day! The market remained primarily within the trading range of the past several days on Thursday, but the intraday bias continued to favor the downside. The Dow Jones Industrial Average ($DJI) had been teasing last year's lows since breaking lower on Tuesday and this finally resulted in close at new 6-year lows. The Dow Jones Industrial Average ($DJI) ended the session down 89.68 points, or 1.2%, at 7,465.95. This is the lowest close on the Dow since Oct. 8, 2002. The Dow alone has fallen about 10% in less than two weeks and is down nearly 50% since October 2007 highs.

The financials led the losses on Thursday with a 14% drop in Bank of America (BAC), a 13.75% loss in Citigroup (C), and a 8.72% decline in American Express (AXP). Retailers were among the strongest shares. Home Depot rose 1.82%, while Wal-Mart (WMT) climbed 0.9%. Also on the upside were Coca-Cola (KO) (+1.45%), and AT&T (T) (+1%).

Meanwhile, the S&P 500 ($SPX) fell 9.48 point, or 1.2%, and closed at 778.94 on Thursday. The Nasdaq Composite ($COMPX) lost 25.15 points, or 1.7%. It closed at 1,442.82.

Nasdaq Composite ($COMPX)


After falling sharply lower with Wednesday's closing bell, the index futures held the intraday lows and slowly began to climb back in afterhours trade. This upside continued throughout premarket trading on Thursday as well and the index futures managed to return to the highs of the 60 minute trading range shortly before Thursday's opening bell. That price level served as resistance and also marked the end of a second wave of correction off the lows of the 60-minute range on the all-sessions time frame. This meant that a turn lower on decent momentum (at least as strong as the upside move and preferably stronger) would create a two-wave continuation short setup on that time frame.

The market was hit with some pretty poor economic data again on Thursday on the employment front, but this data alone didn't have any strong and immediate negative reaction, although the predominate intraday trend throughout the session on Thursday was follow-through to the 60 minute 2-wave continuation pattern on the downside. Ahead of the open the Labor Department reported that 627,000 initial claims for unemployment benefits were filed last week. This was unchanged from a week earlier. Continuing claims, however, hit a 27-year high. They rose 170,000 to 4.98 million for the week ending February 7th.

Also out at about the same time was the most recent producer price data. The Labor Department reported a 0.8% increase in producer prices in January. This was greater than had been expected and was the first monthly increase since last July. The core producer price index, which excludes food and gasoline prices, rose 0.4%. This was also larger than was expected.

Dow Jones Industrial Average ($DJI)


The market pulled only slightly lower off the larger 60 minute price resistance going into Thursday's open. The retracement took the index futures into 5 minute 20 period simple moving average support on the all-sessions time frames. The Dow futures were the weakest and they formed the most clear-cut confirmation pattern of a larger intraday trend change. This index hugged the 5 minute 20 sma out of the opening bell, congesting in a lower level range before triggering a continuation short setup soon after 10:00 ET.

The S&P 500 and Nasdaq Composite futures were also trading in a bearish range into the open, but they kept teasing the premarket highs, unlike the Dow. In the Dow, the pattern is one I refer to as an Avalanche™ because of its high probability for a rapid break lower once the congestion along the moving average support gives way. Thursday's action was very standard for this pattern and the follow-through was strong into the 10:45 ET correction period.

The market formed a nice two-wave continuation pattern, or bear flag, into about 11:15 ET after hitting support with the closure of the gap zone in the S&Ps and Dow and a return to previous 15 minute lows in the Nasdaq. The 5 minute 20 and 200 period simple moving averages served as strong intraday trend resistance throughout most of the session and helped kick off the 11:15 ET breakdown continuation on Thursday morning. This led to a second strong intraday move that continued into the 12:00 ET correction period and a retest of the previous day's lows on the Dow and Nasdaq and previous 15 minute lows in the S&Ps.

The pace of the morning's downside kept the buyers somewhat in check going into Thursday afternoon, but the market still managed a pretty decent correction off the mid-day lows. The 5 minute 20 sma served as initial resistance, but it broker higher out of the 13:00 ET correction period and continued into 13:30 ET. At that point the 15 minute 20 sma in all three indices and 5 minute 200 sma in the Dow and S&Ps stalled the two-wave correction off lows and additional price resistance and the correction period itself helped turn this slower upside move back around into the second half of the afternoon.

S&P 500 ($SPX)


So far this week the best action in the market has taken place in the mornings. This is where the cleanest swings on the 5 minute time frames have formed. Early afternoons have also been decent, but the final couple of hours of trade have been rough. There has been a lot of extra chop with greater overall in prices not only on a 5 minute time frame, but particularly on the 15 minute time frames. Smaller swings have made this more difficult for many to trade and I am hearing a lot of stories of traders giving back morning gains in the afternoon chop.

While not unusual for one portion of the day to serve as the most rewarding, it's always important to be able to judge your risk in any market. At 14:00 ET on Thursday the indices had fallen back to 5 minute 20 sma support. This meant that the door was open for the creation of yet another Avalanche™ on the 5 minute time frame. Instead of holding the support to form an adequate trading range prior to a breakdown, however, the indices tried to break lower too early. This was similar to the continuation move higher out of 13:00 in which the market barely paused at the resistance before moving higher. Action like this can often limit the follow through and make smaller moves more commonplace. Even though the market continued higher out of 13:00 for instance, the upside was slower with a lot of overlap on the 5 minute time frame. Thus, the risk was greater on those moves. In the afternoon the follow-through on each wave was fast with less overlap on the drops on the 5 minute charts, but they lasted very briefly, resulting in more overlap on a 15 minute chart and an environment more favorable to scalpers.

I have a feeling that a lot of the afternoon slop lately has to do with the greater air of uncertainty in the market as a whole. The Dow had been flirting with last year's lows and the market was unwilling to commit to a true break of those lows on Thursday afternoon... or a least the perception of a true break. In reality, we are looking at support levels that are formed on a monthly time frame. As I've talked about a lot over the past several months, this zone of support is quite wide as a result of the larger time frame. We could easily see the lows pierced in the S&Ps as well and still consider the larger zone of support to have held. I do still think that the S&Ps are going to attempt those lows and this should mean an even further push on the downside in the Dow to about 7,200. I have drawn support in blue on the daily charts. As long as the pace of the selling remains steady, this will be the strongest level of support. If the pace increases, then we can get greater-than-equal moves. If, on the other hand, it shifts with more gradual momentum coming in, then we may not see those lows tested as closely.

Dow Teeters Near Yearly Lows

Dow Teeters Near Yearly Lows

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! The market closed relatively unchanged on Wednesday. The Dow Jones Industrial Average ($DJI) rose 3.03 points, or 0.0%, to 7,555.63. Wal-mart (WMT) was the top gainer in the Dow, following its performance as the sole advancer in the index on Tuesday. It rallied an additional 3.65%. Procter & Gamble (PG) came in second with a gain of 1.68%, followed by a 1.31% gain in McDonald's (MCD), and a 1.14% gain in Intel (INTC). Bank of America (BAC) was the top decliner, down 6.73%. General Motors (GM) was the second larger decliner with a loss of 5.5%, while Citigroup (C) posted a loss of 4.9%.

The S&P 500 ($SPX) fell 0.75 point, or 0.0%, and closed at 788.42. In Tuesday's session gold and other precious metals outperformed the overall market, while oil and energy shares faltered. These biases followed through into Wednesday's session as well. Gold closed higher by $10.70 to $978.20 an ounce, while crude oil fell 31 cents to $34.62 a barrel in New York. Financials were ironically the only sector that gained ground on Wednesday. The utilities, consumer discretionary, and energy shares fronted the losses in the remaining 9 industry groups.

The Nasdaq Composite ($COMPX) lost 2.69 points, or 0.2%, and closed at 1,467.97. Research in Motion (RIMM) remained the weakest Nasdaq-100 component, closing lower by another 5.69%. Baidu Inc. (BIDU) (+4.69%) and Akamai Technologies Inc. (AKAM) were among the strongest.

Nasdaq Composite ($COMPX)


Wednesday's session actually managed to begin with a slight gap to the upside. The indices continued to hold the previous day's range, however, so the gap itself had to deal with opening price resistance right away. On the all sessions time frames the move higher into the open was merely a two-wave correction off lows. It ran smack into the 15 minute 200 sma on the all session time frame for the e-mini Nasdaq and had to deal with prior highs and similar resistance in the e-mini S&P and mini-Dow.

This resistance all hit at about 9:00 am ET. The market reversed very quickly at that point, leading to an opening price in the middle of the 30 minute trading range. A two-wave continuation pattern then formed off the opening lows on a 1 minute time frame out of the open, giving way to selling into 10:00 am ET.

The market again found support going into the 10:15 ET correction period, but instead of rounded off at it, the indices pivoted rather sharply higher. Whenever this happens, causing a "V" bottom, the odds favor the previous highs as a very strong resistance level and trading ranges typically follow. First, however, the 5 minute 20 period simple moving average resistance stalled the rally. The indices congested along this resistance level, creating a strong Phoenix™ buy setup on that time frame. The buy triggered out of the 11:00 ET correction period and the indices continued higher throughout the remainder of the morning.

Dow Jones Industrial Average ($DJI)


The market first approached its reversal target zone around 11:25 ET. Not only was there price resistance at this time frame from the prior highs, but the indices were also hitting 5 minute equal move targets on the Phoenix™. It was not yet the next correction period when this resistance hit and the pace of the buying made it more difficult to see any strong initial reaction to the resistance level. As the price action progressed into the 12:00 ET correction period, however, the momentum began to shift overall. The trend channel along the highs rapidly slowed, creating a three-wave momentum reversal pattern which triggered only minutes past noon. This is a very powerful reversal pattern. Even though the market found support intraday soon after 14:00 ET, it sold off again into afterhours trade and all three indices tested the lower limits for the day soon after the closing bell before pulling slowly higher off the double bottom into midnight.

S&P 500 ($SPX)


The Obama administration released further details of a proposed mortgage loan assistance program on Wednesday. This proposal spelled out the details of the plan in much greater detail than had been provided for the stimulus and bail-out packages. This was perhaps one of the reasons that the market managed to hang in there on Wednesday when previous intervention on the part of the government this year has been met with sharp selling. The mortgage rescue plan is aimed at refinancing and modifying mortgages for struggling individuals. The government raised its commitment level to $75 billion... Well, perhaps I should say "our" commitment, since its backed by our taxpayer dollars. By assisting in this manner, however, there was a collective sign of relief heard from many homeowners today struggling to make timely payments.

I still think the S&Ps and Dow can easily slip to slightly lower lows over the next two weeks though. The pace is still stronger on the downside and the volume is modest. We stand a chance at holding here for a few days with the 20 day sma as resistance before that retest though. A nice sideways type of move in the Nasdaq would assist with this push as the 10, 20, 50, and 100 day sma all converge in that index. Keep in mind that the next monthly correction period for the markets is typically March, so I am not expecting any real correction attempt off the lows until then.

Dow Teases November's Lows

Good day! The Dow Jones Industrial Average ($DJI) fell 297.81 points, or 3.8%, to 7,552.60 on Tuesday. One of the top losers was Bank of America (BAC), which fell 12%, while Citigroup (C) closed lower by 12.3%. Only Wal-Mart (WMT) managed to close higher on the session in the Dow. WMT's gains came on the heels of its fourth-quarter earnings report. Profits fell in Q4 by 7.4% due to increased expenses and a stronger dollar, but it has outperformed most of the retail sector. This retail giant raised expense projections for the remainder of the year, but stated that it plans on resuming its stock buyback program that had been put on hold last quarter, as well as plans for further expansion outside the U.S. The Dow just barely managed to close above November 20th's closing price of 7,552.29.

The S&P 500 ($SPX) posted even greater losses than the Dow. It fell 37.67 points, or 4.6%, and closed at 789.17.The decline spanned all 10 of the S&P's industry groups, but was led by the financials, energy, and industrials. Only 19 S&P 500 stocks finished the session with gains. Crude oil closed under $35 a barrel at $34.93. This amounts to a monthly decline of 16.19% and a year-to-date drop of 21.68%. Oil supplies in the U.S. are very plentiful and expectations are that demand will decline as the recession draws out. The breach of support over the past several days makes it very likely that we will continue to see further downside this week. The losses severely affected Chevron (CVX), which fell 5.1%, and Exxon Mobil (XOM), which lost 4.4%.

On the other hand, gold and other precious metals had a strong showing on Tuesday. Gold closed higher by 2.7% at $967.50 an ounce, while silver climbed 2.8% to $14.01. Gold is up 9.4% YTD, while silver is up nearly 21%. Both are coming into strong resistance levels though. Gold is closing in on last year's highs, while silver has retraced almost exactly 50% of last year's selloff.

The current environment helped the dollar rally on Tuesday against the pound, euro, and yen. Meanwhile, the 5-year Treasury note's yield fell from 1.864% on Friday to 1.674% Tuesday afternoon.

The Nasdaq Composite ($COMPX) lost 63.70 points Tuesday, or 4.1%, and closed at 1,470.66. Research in Motion (RIMM) was again a top decliner, falling another 7.98%. Apple (AAPL) also outpaced the overall Nasdaq for a loss of 4.67%. Only one stock in the Nasdaq-100 posted gains. Teva Pharmaceuticals (TEVA) was up 4% after it adjusted earnings expectations higher for 2009.

On the data front on Tuesday the main report to come out was the New York Federal Reserve's Empire State Manufacturing Index. The index fell to a record low of -34.7 in February. Last month it came in at -22.2. 51% of respondents reported declining conditions in their firms, while only 16% had reported improvements over last month. Anything under 0% indicates contraction in the manufacturing sector.

Nasdaq Composite ($COMPX)


From a technical standpoint the market took a slap on the face on Tuesday. The index futures were trading strongly lower throughout shortened trade on Monday with weakness abroad, particularly in Japan. This led to further confirmation for the reversal pattern we had been following in the indices since early last week when the S&P 500 originally gave a two-wave continuation short trigger on February 10th. The confirmation came in the form of a gap lower into Tuesday's open. This created a break in the lower trend channel support from the past month in the indices.

The market remained under pressure early on in the session when a break in the opening congestion led to a gap trigger short on a break in the 15 minute lows. The extreme index gap, combined with this early morning continuation, left the market very extended on the intraday time frames within less than 30 minutes past the opening bell. The larger bearish confirmation trigger kept the bulls on the sidelines, but the downside extension intraday at that point still pushed the market into a corrective phase intraday. A good way to judge whether or not an intraday move is extended is to simply look back at prior trend moves on the same time frame. If the current move is pushing the limits of previous moves of comparable momentum, then there is a good chance that a correction from that trend is on the horizon.

Dow Jones Industrial Average ($DJI)


While energy and oil shares made for some nice shorts intraday and gold offered nice buy setups, the overall market was a difficult one to play. Even many of the energy and gold shares spent the afternoon in a range with most of the action taking place in the morning. Attempts by many to break this range on the downside on Tuesday afternoon were cut short when the market experienced a brief, but rapid flush to the upper end of the day's range around 15:30 ET before falling back to the lows prior to the close. The chop in the indices kept me on the sidelines in that market and focused on individual stocks instead of the index futures. Roller coasters give me a backache and no thrills, so I try to avoid them!

S&P 500 ($SPX)


President Obama signed the Financial Stability Plan into law on Tuesday and now much of the interest is focused upon details of a mortgage relief plan. Obama is expected to release information on this proposal on Wednesday afternoon. The administration has proposed a program that would subsidize home mortgages for troubled borrowers, but the form of these "subsidies" is one of the things we are waiting to hear more about.

The prevailing sentiment in the markets at present is that things could still get worse before they get better. I spoke a lot about the current market on a larger scale in my position trader newsletter this week. Basically, we are at strong monthly support still, as I pointed out back in October, but how the market reacts to that level will determine the larger outlook. There are a number of possible outcomes and they all depend upon the momentum shifts now on the smaller time frames. We could conceivable still have a longer drop form, but leading to a downtrend of slower pace and greater chop. This is not the most likely scenario, but it is still possible given current pace action. More probable is a push into the prior lows, even to a slightly lower low, and then a greater price and time correction off that support zone. March is the next correction period on the larger time frames, so continued weakness into March is likely, followed by a slower correction off that support level.

S&P Poised for First Ever Quarterly Loss

S&P Poised for First Ever Quarterly Loss

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! The Dow Jones Industrial Average ($DJI) fell 82.35 points, or 1.0%, to 7,850.41 on Friday. Telecommunication issues were among the top gainers, but the index was weighed down by heavy losses in financials. The index overall fell 5.2% on the week. The S&P 500 ($SPX) lost 8.35 points, or 1.0%, and closed at 826.84. The losses on Friday left the index lower by 4.8% on the week. The Nasdaq Composite ($COMPX) lost 7.35 points, or 0.5%, and closed at 1,534.36. For the week as a whole the Nasdaq closed lower by 3.6%.

Nasdaq Composite ($COMPX)


Even though this coming week is a shortened one in the U.S. with the exchanges closed on Monday for President's Day, it's still going to be an active one on the news front. A number of key earnings reports are due out, while this week's economic reports are expected to continue to point towards a deepening recession. A lot of focus will also upon the government's response to the current economic environment.

Earnings reports to keep an eye on this week include Wal-Mart Stores (WMT) on Tuesday ahead of the open. It is expected to earn $0.99/share compared to $1.04 a year ago. Hewlett-Packard (HP) reports after the close on Wednesday. It is expected to report earnings of $0.93/share compared to $0.86 a year ago. General Motors (GM) reports before the open on Thursday. It posted a profit of $0.08 a year ago, but is expected to report a staggering loss of $7.39/share on Thursday. Retailers JP Penney (JCP) and Lowe's (LOW) report on Friday before the open. JCP is expected to have earned $0.92/share vs. $1.93 a year ago, while LOW is expected to have earned $0.12 vs. $0.28/share a year ago. Based upon the earnings posted so far this season, the S&P 500 is expected to post its first ever quarterly losses with yet another quarter of decreased revenue growth.

Dow Jones Industrial Average ($DJI)


Among the first of the economic reports coming out this week is the NY Empire State survey on Tuesday. This measures manufacturing activity in the region and is expected to have fallen even further this month. On Wednesday the market will be faced with the most recent housing data ahead of the open. Housing starts are also expected to have fallen yet again. Later in the session, Federal Reserve Chairman Ben Bernanke will address the National Press Club in Washington, D.C. at 1:00 ET, followed by the minutes from the Fed's last policy meeting. The data picks up on Thursday with the weekly jobless claims report, the Producer Price Index, and the index of leading economic indicators ahead of the open. The Philadelphia Fed index will be released intraday. Overseas, the European Central Bank will be meeting to discuss interest rates. Finally, on Friday the Consumer Price Index for January will be coming out. This report measures consumer inflation, which is expected to have rise in January.

S&P 500 ($SPX)


In addition to earnings and economic data, the role of the government in attempting to bring about an economic recovery has been a matter of great debate in recent weeks. There are currently three main topics drawing investor attention. The first one is the $787 billion stimulus package. Called the Financial Stability Plan, or "foospah", this plan was passed by the House of Representatives just over a week ago and most recently by the Senate. It is expected to be passed into law with the president's signature early this week. The plan had virtually no bipartisan support with strong opposition from the Republicans. Only three Senate Republicans supported the bill, while it received no Republican support in the House. This alone is a serious cause of apprehension from the public. John McCain voiced his concern on CNN's State of the Union when he state that "[This bill] is incredibly expensive. It has hundreds of billions of dollars in projects that will not yield in jobs." It is certainly true that the plan is not expected to have an extreme impact in terms of lowering unemployment by much due to the fact that more and more layoffs are announced every day, but it is expected to curtail some of the rising unemployment. Even Obama's aides warned that this would not be a "quick fix" and that the real impact of the bill would take time to assess.

Another topic being discussed is how the government might intervene to stem the rising tide of home foreclosures by modifying troubled home loans. We've been promised greater details on this proposal later this week, but the government is justifiably leery to announce details. Putting together assistance in haste may seem like the wise thing to do during a crisis when everyone wants to hear SOMETHING solid, but it typically isn't the best for the long run. This uncertainty and lack of a solid "game plan" has contributed to the market's uneasiness lately as well.

Finally, there is the idea that the government will partner with private investors through the creation of an "aggregator bank" to purchase the bad assets weighing heavily on many banks. Most of these are tied to mortgages. The real problem here is determining what those assets are really worth. The current details of such a plan are sketchy at best.

The cumulative affect all of these factors are having upon the market is a widespread fear of commitment. Investors, while still taking some chances, are showing by the declining volume and greater weekly price overlap that they are not feeling very secure in their price bias at this time. This type of action can easily play out for many months to come, so the best plan at present is to stick to the shorter time frames from a daily chart for swingtrades to smaller intraday charts for even briefer holding periods. These smaller time frames could easily limit participation even further, but the intraday moves will still make the smaller time frames very viable for decent prices moves compared to risk.

http://www.swingtrader.net (CD course)

Key Earnings Announcements Feb. 16-20

Economic Reports and Events Next Week

Monday, February 16, 2009
No major economic indicators.

Tuesday, February 17, 2009
8:30 a.m. Jan Empire State Fed Manufacturing Survey: Previous: -22.2.
9:00 a.m. Dec Tsy International Capital: Previous: -$33.7B.
1:00 p.m. Feb NAHB Housing Index: Previous: 8.
5:00 p.m. ABC/Wash Post Consumer Conf For Feb 14: Previous: -53.
4Q 2008 E-commerce Sales Report

Wednesday, February 18, 2009
7:00 a.m. MBA Mortgage Application Refinance Index for Feb 13: Previous: -30.3%.
7:45 a.m. ICSC Chain Store Sales Index For Feb 14: Previous: Unch.
8:30 a.m. Jan Housing Starts: Previous: -15.5%.
8:30 a.m. Jan Import Prices: Previous: -4.2%.
8:55 a.m. Redbook Retail Sales Index For Feb 14: Previous: +0.7%.
9:15 a.m. Jan Industrial Production: Previous: -2.0%.
9:15 a.m. Jan Capacity Utiliztion: Previous: 73.6%.
2:00 p.m. Jan FOMC Minutes
4:30 p.m. API Oil Industry Report For Feb 13

Thursday, February 19, 2009
8:30 a.m. Initial Jobless Claims For Feb 14 Week: Previous: -8K.
8:30 a.m. Jan Producer Price Index: Previous: -2.2%.
8:30 a.m. Jan Producer Price Index,ex-food & energy: Previous: +0.1%.
10:00 a.m. Jan Conference Board Leading Indicators
10:00 a.m. Feb Philadelphia Fed Business Index: Previous: -24.3.
10:00 a.m. DJ-BTMU Business Barometer For Feb 6: Previous: -1.2%.
10:30 a.m. EIA Natural Gas Inventories For Feb 13
11:00 a.m. US Energy Dept Oil Inventories For Feb 13

Friday, February 20, 2009
8:30 a.m. Jan Consumer Price Index: Previous: -0.7%.
8:30 a.m. Jan Consumer Price Index, ex-food energy: Previous: +0.1%.



Key Earnings Announcements Next Week

Monday, February 16, 2009
Before: -
During: -
After: -

Tuesday, February 17, 2009
Before: AMED, ARB, BPHX, BXC, DAI (?), FOSL, RAIL, GPC, GGC, GTXI, HPY (?), HOC, HSP, HHGP, INMD, KOP, LPX, MSO (?), MDT, PAG, RJET, STFC, SSYS, TEVA, RIG, UTHR, VCI, WMT, WSO, ZBRA
During: MKND
After: A, AMMD, AUTH, AXYS, BEAT, CRA, CHK, CGNX, CPTS, CPSS (?), CW, FOE (?), GPRO, IO (?), KALU, LZB, MIG, MRH (?), NAVG, PLAB, SPSS, SGY, SDXC, TEAM (?), UCTT, UPL, UAM, VOLC, WYNN (?)

Wednesday, February 18, 2009
Before: APWR (?), ACGY, ALD (?), AEE, AUXL, AVA, CATM (?), XEC, CMCSA, CEG, COWN, DE, DTG, FNDT, GTIV, GNA (?), GT, HNI, HST, ICON (?), INCY, IMA, JAKK (?), LOJN, NEWS, NWPX (?), OMX, OC, PLA, RIMG, ROC, RBCN, STP, MDCO, VAL (?), WLK
During: -
After: AAP, AEM, AIQ (?), ACLI (?), ADI, BIDU, BMRN, NILE, BDN, CBS, CCRT (?), CSGP, CYBX, DENN, DBRN, ENOC, EXAC, EXR, FRT, FADV (?), FR (?), GA (?), HPQ, HIMX, IM, ITRI, KGC, KONG, LNET, MSSR (?), MCRI (?), NATL, NHP, NLS, NCIT, NTES (?), NHWK, NINE (?), NTRI, OII, ODSY, ORLY, PAAS, PGTI, PTP, PCLN, RCRC, SINA (?), SIRF (?), SKX, SNPS, TLEO (?), TRN, WFMI

Thursday, February 19, 2009
Before: EYE (?), ALDN (?), AMWD, AGP, APA, ABG (?), AACC, ATN (?), ATRC, B, BNHN (?), BRY (?), BBW, CACH (?), CCC (?), CSE (?), CTL, LNG (?), CBR (?), CITP, CEP (?), CPA, CRY, CVS, DSX, EV (?), ENZN (?), SSP, EXPE, GM (?), GLBL, GG, GPI, GBE (?), HGRD, HRL, HOS, HPT (?), HRP (?), IDA, IDC, KNOL, LTM, MPEL (?), MGM (?), NGS (?), NM (?), NEM, NBL, ORB, OFG (?), PDCO, PQ, PNCL (?), PDE, QLTI, RSH (?), RGC, RS, RMG, SCHS, POOL, SSW (?), SRE (?), SPAR, SPNC, S, GASS, SHOO (?), SFY, SCMR, TTC, TRAD (?), VDSI, VTAL, WPI, WST, WMB, WPZ, WATG (?), XTO
During: MNTG (?)
After: AEA, ARII (?), AMSG, AVR (?), BRCD, BUCY, BLDR, CAB, CECO, CEC, CENX, STV (?), CQB, CYH, RIO, CROX (?), TRAK, DITC, EXEL (?), GFIG, LOPE, GW (?), HGIC, HVT (?), HE, HITT, HME, HYC (?), ICXT (?), INWK, IBI, ITMN (?), INTU, JCOM, KND (?), LHO, LOCM, MCHX, MORN, NANO, NR, NDSN, ORH, OIS, ASGN, OPTV (?), OSIP, PLLL (?), PGI, RAX, RADS (?), RRGB, RCKY, RUTH (?), SAPE, SINT (?), SPN, TSO, TSCM, SWIM (?), UNTD, UEIC, WOOF, VRGY, VLCM, WBMD, WMGI

Friday, February 20, 2009
Before: AYR (?), ABX, BRC, HMSY, JCP, LPNT, LOW, PNW, RTIX, THI, GTS, TRW
During: -
After: WRI


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.

Markets Continue to Round Off at Support

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

Good day! When we were heading into Wednesday's session the index futures were basing at lows on the all-sessions time frames. This left the door open for a flush lower as a result of this and my focus on the shorter time frames remained on the bear side. The bulls gave us one opportunity for a 15 minute correction in the afternoon on Wednesday with the double bottom/2B formation intraday, but on the all-sessions charts there was still more room to continue to round off at the daily support which is shown in green on the charts below.

Nasdaq Composite ($COMPX)


The indices followed through on the all-sessions range break in the early morning hours on Thursday. A premarket base at the lower end of the range, particularly on the Dow and S&Ps, led to sharp drop lower shortly before the market opened. This break was not enough to bust the larger daily support and served to help round off the indices to a greater degree at the support zones. This was particularly true in the Nasdaq Composite which had broken Tuesday's lows on Wednesday. The result was that the third low into Thursday morning created a momentum reversal pattern in that index.

The market began to trigger the momentum reversal early on in Thursday's session. The indices had gapped lower, but held lows at 10:00 ET. The reversal was not very strong to begin with. The market recovered, but the pace was gradual in the Dow and S&Ps. The 5 minute 20 sma served as initial resistance, but the Nasdaq was stronger than the rest of the market and was able to pull higher. A small congestion took place with a 2 wave continuation into 11:30 ET. This took the form of a Phoenix in the Dow and S&Ps. The rally then continued into the early afternoon with a second wave of buying into 12:30 ET.

This action throughout the morning and mid-day served to create a larger two-wave reversal pattern for a reversal off highs, or continuation of the prior downtrend in the case of the weaker Dow and S&Ps. The 15 minute 20 sma served as resistance in the Dow and S&Ps, while the stronger Nasdaq returned to Wednesday's morning highs. The reversal of this morning trend began easily off these resistance levels. The Nasdaq created a mirrored course of action compared to the morning, while the weaker indices eventually hit new intraday lows.

This action was very similar to the prior afternoon but this time the Nasdaq was the one with the double bottom while the Dow and S&Ps created 2B reversals on the 15 minute time frames off the intraday lows. This trigger was stronger than the previous day because it was the second such pattern in a row. I will typically take a larger position due to the increased odds for success as well as the higher odds of a sharp reversal when two 2B patterns form in a row as opposed to just one. This second reversal triggered out of the 15:00 ET correction period and the indices rallied easily throughout the final hour of trade to close at intraday highs


Dow Jones Industrial Average ($DJI)


The action in Thursday's session was well in line with the expectations we had heading into the day that the market would attempt to hold the larger daily trend channel that has been in place since mid-January for at least several days. The risk I discussed in yesterday's column remains, whereby the rounding off at this channel support (in green) can make it more difficult for the channel to break stronger lower and can lead to more of a creeping move through the support instead of a strong flush.

The shorter term time frames are now still bullish as a result of the momentum reversal on the all sessions time frames over the past three days, but the larger daily is still bearish and will have resistance at the upper end of the channel once again. A strong rally back into that level, followed by upper level congestion could prevent the range from breaking lower, but we'll have to wait to see how the momentum plays out on this current buy setup that is underway on a 60 minute time frame before we can predict that more accurately. The conditions, however, are favorable.

A "V" type of bottom, as opposed to a momentum shift, would have been the most bearish within the trend channel of the past month to have made a strong break lower the most certain and favorable outcome. Without that, we have to continue to monitor the channel for a change in momentum large enough to break the range and not just to swing prices back and forth within it.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) fell 6.77 points, or 0.1%, to 7,932.76 on Thursday. Coca- Cola (KO) outshined the rest of the Dow with a gain of 7.56% after it beat earnings estimates, thanks in larger part to strong global growth. Pfizer Inc. (PFE) came in second with a gain of 1.88%, while Disney (DIS) gained 1.78%, and Kraft Foods Inc. (KFT) gained 1.43%. Bank of America (BAC) was the Dow's biggest loser, falling 3.29%, while General Motors (GM) lost 3.28%.

The S&P 500 ($SPX) rose 1.45 points, or 0.2%, and closed at 835.19.

The Nasdaq Composite ($COMPX) rose 11.21 points, or 0.7%, and closed at 1,541.71.

On the news front the focus will remain upon the $789 billion stimulus package that is still expected to pass this week. This plan, as well as additional news on mortgage relief, leaves a lot of questions yet unanswered. Valuations of troubled assets remains a concern within the context of the current "bail-out" package, while reports of another plan in the works that would subsidize mortgage payments is still in its infancy. Whether it evolves and in what form will be something that many will be keeping a close eye on. In the markets it does not matter what the news ends up being since the charts nearly always lead anyway, but it can certainly help to keep these proposals in mind. News releases of this kind can move the market quickly and it's best keep on your toes when trading in such an environment.

On Tuesday the largest portion of the selling with the strongest momentum took place within the first half of the day. The remainder of the day trended lower with a large degree of overlap from one bar to the next on the 15 minute time frame. The Nasdaq continued lower on Wednesday with slightly lower lows on the 30-60 minute time frames, but without the same magnitude of selling as see Tuesday morning. This slowdown makes it more difficult for larger support levels to break when they are tested. On the other hand, when a security falls more sharply into a support level and then hugs the support it can more easily break it. This is what we are seeing on the daily time frame when the market fell into support in mid-January.

This slowdown intraday does not mean that the support will not break on the daily time frame, but it can more often lead to less substantial breaks than the initial drop on the larger time frame. This was the move lower in the first half of January. The fact that volume did not drop off much after hitting lows in January and throughout the past month also can hinder a stronger breakdown. Congestion along the daily support from the lower channel for a few days would help facilitate a better break in the support.

We still have to keep in mind, however, that the larger weekly and monthly time frames remain at strong support levels. This will make even a strong break lower on the daily time frame extremely unlikely to break the lower end of the weekly range, although an equal move on a daily breakdown would mean a slightly lower low into last year's support in the S&P 500. This would still be considered within the zone of the weekly and monthly support.

International Online Trading Expo Speaking Schedule:

International Online Trading Expo Speaking Schedule:

Fibonacci Trading Made Simple with Toni Hansen
Monday, February 23, 6:00-7:00 pm ET

A great deal has been written about Fibonacci series and its applications in the marketplace in recent years, many of which have been exceedingly complex. In this session veteran trader Toni Hansen will share with you how to easily apply Fibonacci levels to your own trading utilizing examples from a wide array of securities ranging from FX to E-Mini futures on multiple time frames. Even traders with the most basic of technical analysis skills shall come away with a core skill set that can be immediately applied to improve market timing, and in the process, the most sought-after goal of consistent profitability.

https://secure.moneyshow.com/msc/NYOT/registration.asp?ts=t&sid=NYOT09&newReg=t&scode=013164

Market Digests Tuesday's Selloff

Market Digests Tuesday's Selloff

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

Good day! The market swung in a wide range on Wednesday after selling off sharply the day before when the Senate passed its own version of an economic stimulus package. The House's version was passed last week. A compromise was struck Wednesday afternoon and is expected to win congressional approval.

Tuesday's "sell-the-news" decline offered an initial trigger on the two-wave continuation short setup on the daily time frame in the S&P 500 and Dow Jones Industrial Average that I spoke of on Monday evening. The two waves higher are shown on the daily charts in red. The next step in confirming this setup is a break in the lower channel, shown in dark green as support. This support level hit Tuesday afternoon in these two indices and on Wednesday afternoon in the stronger Nasdaq Composite. Since there was a pace shift into this support in all three of the indices, this task may not be as easy as it would appear on the daily charts.

Nasdaq Composite ($COMPX)


On Tuesday the largest portion of the selling with the strongest momentum took place within the first half of the day. The remainder of the day trended lower with a large degree of overlap from one bar to the next on the 15 minute time frame. The Nasdaq continued lower on Wednesday with slightly lower lows on the 30-60 minute time frames, but without the same magnitude of selling as see Tuesday morning. This slowdown makes it more difficult for larger support levels to break when they are tested. On the other hand, when a security falls more sharply into a support level and then hugs the support it can more easily break it. This is what we are seeing on the daily time frame when the market fell into support in mid-January.

This slowdown intraday does not mean that the support will not break on the daily time frame, but it can more often lead to less substantial breaks than the initial drop on the larger time frame. This was the move lower in the first half of January. The fact that volume did not drop off much after hitting lows in January and throughout the past month also can hinder a stronger breakdown. Congestion along the daily support from the lower channel for a few days would help facilitate a better break in the support.

We still have to keep in mind, however, that the larger weekly and monthly time frames remain at strong support levels. This will make even a strong break lower on the daily time frame extremely unlikely to break the lower end of the weekly range, although an equal move on a daily breakdown would mean a slightly lower low into last year's support in the S&P 500. This would still be considered within the zone of the weekly and monthly support.

Dow Jones Industrial Average ($DJI)


In the intraday trade on Wednesday the market spent a lot of time bouncing back and forth on the 5 minute time frame. The mid-day congestion from Tuesday served as the upper level resistance intraday. Around 13:00 ET the market began to head lower. The indices were hugging the 5 minute 20 sma zone after pivoting off highs around 11:30 ET. This congestion broke down into the afternoon, leading to one of the strongest moves of the day. The indices fell back into previous lows around 14:15 ET. The Nasdaq managed a slightly lower low on the 15 minute time frame. The overall action thus favored a 2B reversal in the market as a whole into the remainder of the day. A 2B is a type of double bottom that serves as a trap due to the slightly lower low made by the second low. This pattern was facilitated by the slowdown in the downside momentum the previous afternoon and the market was able to quickly return to the upper end of the intraday trading range by the time the 15:00 ET correction period rolled around. Of course the larger bias still favored a range, so the market held onto those highs and pulled back somewhat again into the close.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) rose 50.65 points, or 0.6%, and closed at 7,939.53. The financial sector was the hardest hit on Tuesday, falling 12%. This left the sector exhausted on the short term, allowing it to recover slightly in Wednesday's session. The sector rebounded by 3% with Citigroup (C) up 10.2%, Bank of America (BAC) up 9.4%, and J.P. Morgan & Chase (JPM) up 6%. These were the top three gainers in the Dow. Exxon Mobile (XOM) was the largest decliner, down 2.05%, followed by Disney (DIS), which slumped 1.39%.

The S&P 500 ($SPX) rose 6.58 points, or 0.8%, and closed at 833.74. Oil prices dropped sharply on Wednesday (-4.3%), causing oil-related securities and energy shares to be amongst the hardest hit throughout the session. Many, like XOM, trended lower throughout most of the day. Crude oil closed at $35.94 a barrel.

The Nasdaq Composite ($COMPX) rose 5.77 points, or 0.4%, and closed at 1,530.50. Technology had been leading the recovery off mid-January's lows, but they had a difficult time on Wednesday. One of the major losers was Research In Motion (RIMM). RIMM fell 14.5% to $48.76 after it warned about Q4 earnings. The stock had started to turn off the upper end of the trend channel that had been in place since hitting lows in early December. The 10 day sma had served as support throughout the year-to-date, but this support level busted very quickly with a large downside gap. RIMM found support intraday at the 50 day sma.




Economic Reports and Events
Thursday, February 12, 2009
8:30 a.m. Initial Jobless Claims For Feb 7 Week: Expected: -11K. Previous: +35K.
8:30 a.m. Jan Retail Sales: Expected: -0.8%. Previous: -2.7%.
8:30 a.m. Jan Retail Sales, ex-autos: Expected: -0.4%. Previous: -3.1%.
10:00 a.m. Dec Business Inventories: Expected: -1.0%. Previous: -0.7%.
10:00 a.m. DJ-BTMU Business Barometer For Jan 30: Previous: +0.3%.
10:30 a.m. Feb 6 EIA Natural Gas Inventories

Sandwiches and Sense

Sandwiches and Sense

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! The market was under a great deal of pressure on Tuesday after reacting poorly to government intervention with the passage of the Senate's $800 billion-plus economic stimulus legislation, which must now be reconciled with the House's bill that passed last week. Once this occurs, it will be passed onto the president, who appears quite eager to affix his signature to it. If only the markets were as optimistic. History, however, has shown a poor track record for intervention and this fear weighs heavily upon today's market participants. With or without intervention, however, the charts tell us that we are in for a long recovery period. Whether the proposed legislation extends that recovery or shortens it will never really be known since only one course of action is possible. Given that the money for this "stimulus" has to come from somewhere, however, what will be the real cost upon the nation?

I have a "live and learn" mentality, so the "live and blame, whine, beg, and pout" one that is griping the nation rather annoys me. Typically I tend to steer clear of controversial topics, and while "we" were in fact "duped" by unethical accounting and the myth of buy-and-hold investing and the like, how many people can honestly say, for instance, that if they borrowed on a "stated income" loan and exaggerated their income, that they didn't have some tweak of conscious telling them this may not be the smartest thing to do? Sure, we can say that "they" never should have allowed us do such things. This seems rather like the companies that are in trouble saying that the government should have never let them act in the manner that got them in trouble in the first place. So, who can the government hold accountable as its protector? Hmmm... Well, I suppose I could try to blame it on a power deemed greater than the government, but I don't think that would be taken very well as a rational explanation, so the only other alternative is to swing back around to the level of the individual.

As I often have to remind my kids, "You're responsible for your actions and all actions have consequences. Accept that fact and learn from it!" A great example of this is the one I often joke about. Nearly 5 years ago I bought a home in Florida. The housing market was booming with prices up more than double digit percentages within a year. I had a very strong desire to move a year after I purchased my home, but literally every single person I spoke to urged me to stay at least two years to avoid the capital gains taxes. Reluctantly I waited. When I finally listed my house the tide was already beginning to turn, but my realtor was very convincing that "once season rolled around" (meaning the winter months) that it would be easy to sell once again. Of course this was not the case. Ironically I had not looked at a chart of home prices, or else I would have undoubtedly been more concerned!

While those that told me to hold off, as well as a realtor who told me to hold my price steady near highs, were certainly the influencing factors in the ultimate decision to not be more aggressive in selling, the decision was nevertheless still mine. Although I may joke about it, and the fact that my home is now worth less than what I paid for it, I've never felt anyone else was to blame and I've never harbored any resentment towards those that influenced my decision. Nor have I've ever considered holding them accountable. This is not the sentiment that I get from many that I speak with though and emotions run high as many now face losing both their job as well as their home.

For those that have not known me over the years, you may say something along the line of how I may have no idea what it is like to loose nearly everything and not even know where money will come from next week to just buy food, or pay rent, etc. The truth is that I know that feeling very well. I've been there several times and was reminded of it very vividly last week when I returned to Iowa to attend the funeral services of my maternal grandmother. My mother's family, in the heart of which I grew up, was quite poor. They were farmers in a very rural area of Iowa, who hunted not for sport, but because it was necessary to survive. Most of my own clothes were either "hand-me-downs" or home-made.

Within this upbringing, however, there was always the belief that when the need for something arose, that there would always be the means to survive and make it through it. They instilled this in me unknowingly and as a struggling young trader also working to build a business in my early 20s I'd been down to my last dime on several occasions. (Luckily ramen noodles only cost about that much!) Each time this occurred, a strong feeling of hopelessness and despair would creep in. At times it was very overpowering, but I knew I could not just sit there and wait for a handout. If I wanted to change my situation I had to retrench and find some means to pull myself out. So... I did. I also tell my kids that they may not always like the options they have, but there are still options.

My parents, however, did not always agree on how to remedy a bleak situation (or at least those that seemed bleak as a 7-year-old). When I was little and got in trouble for some particularly heinous deed (probably slugging my brother... even though he undoubtedly deserved it), my mom would send me to bed without supper. Essentially, she was taking the same approach I do with my own children. My dad, however, would then sneak into my room later and bring me a sandwich, having felt bad about my circumstances, even though he knew they had been of my own making. This, of course, infuriated my mother, leading to a lot of additional tension in the household stretching way beyond the fact that I was naughty and got into trouble.

Our nation, as well as many others around the globe have found themselves in a rather similar situation. Their children have gotten into trouble and now they must decide what to do. I can't help thinking about those sandwiches though (now manifested in the guise of bailout and stimulus packages) and remember how well that worked out... or rather how it didn't... The market's initial misgivings on such an approach resulted in nearly a 5% loss on the S&P 500 in Tuesday's session. I guess someone must have mentioned the sandwich debacle...

Nasdaq Composite ($COMPX)


From a technical standpoint the market was still in the "wait-and-see" state of mind going into Tuesday's opening bell. The indices did gap slightly lower, but quickly filled the gap. This gap, nevertheless, was enough to continue to shift the momentum at highs on the 15-60 minute time frames with the indices creating a rounded high. Such action makes it very easy for sellers to take over very quickly and less easy for the bulls to hold on. By 10:15 ET the market was already turning lower once again. The 5 minute 200 sma served as support in the Nasdaq and the market congested into 11:00 ET. At that point the bears were unleashed. The light volume base on the 5 minute time frame was enough to cinch a bearish bias, but the news closed the deal. A continuation pattern took place around 11:30 ET and then prices again slowed into noon. Low-level, mid-day congestion followed with an early break lower out of the 13:00 ET correction period.

Dow Jones Industrial Average ($DJI)


Without a longer mid-day base, the indices were stuck having to drift lower with a greater amount of chop in the final 2.5 hours of trade. Since this break lower on Tuesday triggered a two-wave continuation pattern on the daily S&P500 and the move was also the first day of a daily uptrend channel break, I shied away from attempting to play late day pivots off shorts since the odds favored a close at or very close to the day's lows. This favor held true with the indices posting substantial losses intraday.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) fell 381.99 points, or 4.6%, to 7,888.88 on Tuesday. The S&P 500 ($SPX) was harder hit. It lost 42.73 points, or 4.9%, and closed at 827.16. The financials were the worst performers, but the losses extended to all 10 of the S&P's industry groups. The Nasdaq Composite ($COMPX) lost 66.83 points, or 4.2%, and closed at 1,524.73.

Although the market pulled up somewhat finally in afterhours trade off short-term daily support, the larger 90 minute bias remains bearish. The congestion taking place into 4:00 am ET this morning also has a strong potential for a break lower. In order for the daily break to confirm, however, we still need to see the uptrend channel in place since mid-January break lower and not just the one from the start of February, which is what broke on Tuesday.

Market Awaits Senate Vote

Market Awaits Senate Vote

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! The market swung back and forth throughout the session on Monday as traders and investors alike awaited news out of the Senate regarding a vote on the economic stimulus package. Originally a vote had been anticipated Monday evening, but now hopes are pinned on a finalized version on Tuesday. The House passed its own version last week and Obama is pushing to have legislation signed within a week.

Nasdaq Composite ($COMPX)


The air of "wait-and-see" was apparent out of Monday's open. The indices had continued their premarket ascent and opened relatively unchanged on the session Monday morning. They flushed lower for several minutes into 10:00 ET, but again took a turn soon after 10:30 ET. At this time the market rallied sharply higher. This took the Dow back into the target zone of the previous day's highs. As expected, this zone served as strong resistance, but the pace of the final intraday rally into that high meant that is was not easy for the market to pull back off the resistance as it was to hit it in the first place.

Dow Jones Industrial Average ($DJI)


After pivoting off highs, the market slowly retraced the morning rally. There was the need for a greater shift in pace, however, before the market could really begin a stronger price correction. The market began this pace shift when the indices climbed slowly back into the zone of the morning highs around 13:00 ET. A two-wave move lower followed, taking the indices into the 5 minute 200 sma on the all sessions time frames in the indices into 15:00 ET. This correction period and support level held well and the market bounced quickly back into the mid-day highs. With the upcoming legislation on the horizon, however, this move alone was not enough to allow the market to clear the intraday highs and the indices again pivoted lower into the close. With no consensus yet reached, the futures began to fall sharply around 19:00 ET. They continued to fall back to premarket lows and the 15 minute 200 sma on the all sessions time frame which served as strong support around 22:00 ET.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) closed virtually unchanged on Monday, down 9.72 points, or 0.1%, at 8,270.87. Despite this fact, 2/3 of the index components closed in the red. The decliners were led by Coca Cola Co. (KO), which fell 2.85%, Procter & Gamble Co. (PG), which fell 1.96%, and Home Depot (HD), which lost 1.87%. These were rather minor losses overall given the larger swings we have seen lately and it's the main reason the index overall changed little on the session. The gains in index leaders General Electric (GE) (+13.87%) and Bank of America (BAC) (+12.40) made up for a lot of the ground lost by other index components. It is believed that the government's stabilization legislation will provide much-needed assistance to these struggling companies. 3M (MMM) also did well and gained 3.28%.

The S&P 500 ($SPX) rose 1.29 points, or 0.2%, and closed at 869.89.

The Nasdaq Composite ($COMPX) lost 0.15 points, or 0.0%, and closed at 1,591.56. After creating a weekly momentum reversal pattern off the third test of lows in mid-January, Apple Inc. (AAPL) continued to perform well in Monday's session. It rose 2.8% to close at $102.51.

The U.S. Dollar Index closed at 85.050 on Monday. Gold closed at $892.80/ounce. Crude oil on the NYMEX ended the session at $39.56/barrel. The 30-year Treasury bond yield stands at 3.706%, while the 10-year Treasury note yield is at 3.027%.

Intraday bias heading into Tuesday is up in the air. The indices are at strong resistance on a 60 minute time frame, so further corrective action off the highs can create continued sideways chop or a pull prices lower out of the upper level congestion. The 60 minute Dow 2B is still in play though, and this leaves room for more upside within the week. The S&P is unfortunately not offering a comparable buy setup. Instead, it is at risk of a 2-wave continuation short on the 60 minute as a result of the slightly higher low and move back into prior highs on that same time frame. It's difficult to say at this point which one will win out since we need more of a chance in pace on the smaller time frames to trigger either of them and the Senate vote could easily be the catalyst.

Market Turns Higher on 90 Minute 2B

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! I'd like to extend a "Thank you" to everyone that has emailed me over this past week. Since my grandmother's passing last weekend, I spent most of the remainder of the past week in Iowa with family and am just now back and getting caught up, so if you emailed me in the interim or shortly before I left, I'll be spending the first part of the week getting caught up on correspondence. Thank you very much for your patience and understanding...

Nasdaq Composite ($COMPX)


Heading into last week we were looking at the potential for a 2B forming on the 90 minute charts of the indices. The Dow was already beginning to position itself for this formation going into Monday. Early on in the week the markets continued to slow their descent on that time frame and the Dow's 2B materialized. The rest of the market moved on better relative strength, but in conjunction with the Dow's trigger on the afternoon of the 3rd.

The market continued its 60 minute reversal early on the morning of the 5th after correcting somewhat the prior afternoon and into premarket trade. A solid base then followed throughout the afternoon of the 5th, throughout afterhours trade, and into Friday morning on the 6th. This left the market poised for a strong break higher once again Friday morning. The upper level congestion gave way immediately into Friday's open and was followed by one of the strongest rallies of the year to date.

Dow Jones Industrial Average ($DJI)


The upside on Friday continued throughout most of the session. By mid afternoon the indices were hitting equal move target levels on the breakouts as compared to Thursday's morning ascent. The ES (S&P 500) hit it exactly. The pace of the 15 minute rally on Friday, while quite strong compared to recent trade, was still weaker into that target than the beginning of the move and the overall move on Thursday. This made it more difficult to hold up afterhours like it had the previous day. The market spent the final 2.5 hours of trade on Friday in a range along highs which showed weakening into the close with the indices hugging the 15 minute 20 sma support intraday.

The momentum shift on the all sessions time frame led to a break lower in Sunday's trade in the index futures, favoring a gap lower into Monday's opening bell. The reversal did find support, however, at the 50% retracement level from Friday's ascent. As a result, the premarket action in the index futures has primarily been a gradual uptrend channel. As of 6 a.m. ET the channel's pace is slower than the prior descent, which will make the zone near Friday's highs serve as a strong intraday resistance level and will increase the risk that it can break more quickly to the downside on at least the shorter term time frames intraday.

S&P 500 ($SPX)


In Friday's session the Dow Jones Industrial Average ($DJI) closed higher by 217.52 points, or 2.7%, at 8,280.59. For the week overall the index closed higher by 3.5%. The S&P 500 ($SPX) rose 22.75 points, or 2.7%, and closed at 868.60. On the week overall this amounted to a gain of 5.2%. The Nasdaq Composite ($COMPX) gained 45.47 points, or 2.9%, and closed at 1,591.71. The Nasdaq had the strongest weekly gain, rising 7.8%.

Although earnings season is still well under way, a lot of the focus this week will be in the direction of the government's economic stimulus package. The Senate debated the topic over the weekend and is expected to resume on Monday with a vote on the package early Monday evening. The House passed its version of the bill last week. The indices have decent daily resistance here, at least for the short-term. The risk is still present that we may see another flush lower on the daily charts before the market can resume its gradual upside correction off last year's lows. In the Dow this can still amount to another slightly lower low on the 90 minute chart. Thew larger monthly bias continues to favor this zone of support on that time frame holding for several years, but with a lot of overlap in price levels from one month to the next.

Fibonacci lines on charting

Question regarding platforms that allow you to utilize Fibonacci lines:

ANSWER: "First of all, thank you so much for your kind words! I am glad you enjoyed the presentation! I use Real Tick, which does allow me to easily draw Fib lines. A lot of the main charting platforms do this and many of the free sites do as well for things like FX. "Finance Chart" is one example: http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChart.aspx for instance...

All my best,
Toni"

Traders Library course question

QUESTION:
Trades Library has a new 90 Min video out by Toni.
I have these 2 courses below now and want to know if there is any new material or information that would not be found in these previous courses.
1. 5 Technical Signals You Should Not Trade Without
2. No Indicators Necessary!
Thanks
Dave

ANSWER:
Hey Dave,
The video they have is a recording from the Traders Forum last October. It's
focused upon purely using the tools for targets, so there is a
degree of overlap between the courses. For those that want expanded examples
and how to use the tools from the other courses for more specific focus,
however, it will certainly be a good addition.

All my best,
Toni

Q & A - CD course and methology

QUESTION:

Toni, I have been swing and position trading off and on without much success over the years and here are a few questions that I hope you have the time to respond to...

1. Does your method have search criteria in order to find candidates?
2. I did subscribe to your newsletter, but didn't see within the newsletter any of your position trades. Am I missing it? Perhaps, I'm not looking carefully.
3. How does your course (5 Technical Signals) differ or compare to Bill Poulos (Instant Profits, Quantum Swing Trader) or Barry Burns (topdogtrading)...or how is it unique?
Thank you for your time!
Sincerely, J.

ANSWER:

Hello J.,

Thank you....

Regarding your questions... There are so many courses and such out there these days that I really do not know what most of them these days entail. The course that I developed is based upon my own form of technical analysis, however, and focuses upon the building blocks of price and pattern development instead of upon learning specific patterns and there is no strong emphasis upon learning to use indicators. A number of my clients and students over the years now have products of their own and I've been teaching for about 10 yrs, so certainly many of my techniques are becoming more well-known and many of the things that I learned on my own were certainly "discovered" by other analysts and traders over the years as well. My style of analyzing pros and cons and market timing, however, has been recognized by veterans in this industry as unique in that many of the professional traders had used many of the same types of analysis, but they never focused upon teaching them.

The course came about as a result of a lot of the one-on-one work I was doing with individual traders. Many had been trading for several years already, but they had traditional technical analysis backgrounds, so I found that I was nearly always repeating the same lessons to begin with. Instead of doing this with each and every person, it made more sense to create a CD course that would cover the material.

Included in the course is not only methodologies for building price patterns, but also a Market Timing Guide that discusses combinations of the building blocks into many of my favorite "specific" patterns. It shows pros and cons within the patterns themselves using the building blocks and discusses sample trades utilizing this method of examining pros and cons and how it affects the outcome of the position. I recently updated and expanded the Market Timing Guide to include twice as many examples and am including it as a pdf for those that order the course this month.

Finally, the position trader newsletter comes out weekly except on market holiday weekends or when I am traveling or sick. It is currently free and as long as you are on the email list (which you can join on the homepage of tonihansen.com), then you will receive it each weekend.

All my best,
Toni

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, February 9, 2009
No major economic indicators.

Tuesday, February 10, 2009
7:45 a.m. ICSC Chain Store Sales Index For Feb 7: Previous: +1.6%.
8:55 a.m. Redbook Retail Sales Index For Feb 7: Previous: -2.7%.
10:00 a.m. Dec Wholesale Trade: Expected: -0.8%. Previous: -0.6%.
4:30 p.m. Feb 6 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For Feb 7: Previous: -52.

Wednesday, February 11, 2009
7:00 a.m. Feb 6 MBA Mortgage Application Refinance Index: Previous: +15.8%.
8:30 a.m. Dec Trade Balance: Expected: -36.0B. Previous: -40.44B.
10:30 a.m. Feb 6 US Energy Dept Oil Inventories
2:00 p.m. Jan Federal Budget Balance: Expected: -$87.5B. Previous: -$83.6B.

Thursday, February 12, 2009
8:30 a.m. Initial Jobless Claims For Feb 7 Week: Expected: -11K. Previous: +35K.
8:30 a.m. Jan Retail Sales: Expected: -0.8%. Previous: -2.7%.
8:30 a.m. Jan Retail Sales, ex-autos: Expected: -0.4%. Previous: -3.1%.
10:00 a.m. Dec Business Inventories: Expected: -1.0%. Previous: -0.7%.
10:00 a.m. DJ-BTMU Business Barometer For Jan 30: Previous: +0.3%.
10:30 a.m. Feb 6 EIA Natural Gas Inventories

Friday, February 13, 2009
10:00 a.m. Mid-Feb Reuters/U Mich Sentiment Index: Expected: 60.0. Previous: 61.9.


Key Earnings Announcements This Week:

Monday, February 9, 2009
Before: AIXD (?), ASF, AG, AMRI, ARE, BZH, BWP, CNA, CTRP, ENER, GCOM, HAS, HEW, LO, MCY, NTE, NOOF, NYX, OHB (?), PARL, ROH, SOHU, WRB, WHR
During: DIOD
After: ABCO, AFG, ASEI, AXS, BEC, CELL, BRKS, CPT, CRL, CMP, CRK, CUZ, CUTR, WIRE, FWRD, GNW, IPHS, LRN, LDSH, LNCR, LNC, LGF, NUAN, PKY, POWL, PPDI, PFG, PLD, QGEN, SB, TWTC, UDR, VECO, VRTX (?), VMC, ZOLT (?)

Tuesday, February 10, 2009
Before: ACM, ASCA, ARW, ATRC (?), CNC, CXW, CVH, CYNO, DTV, ELN, GET, HCP, HERO, ICE, LCAV, MDC, TAP, NURO, OMC, PBG, PER, Q, RDWR, SKH, SYNT, TRA, PNX, UIS, UMC, VSH, VTNC, YGE
During: -
After: ATAC, AMX (?), AMAT, BBSI (?), CSCD, CBG, CERN, CF, CHH, CVGI, CSC, CPSS (?), CRAY, EXEL (?), EXPD (?), FOE (?), FIS, BGC, GIVN, GLUU, HGR, HCSG, HS, KFRC, KONA, LTRE, XPRT, MVSN, MANH, MAXY, N, NSR, NVDA, PL, PZN, QSFT, RUSHA, SWIR, SIAL, SVR, TTMI, VFC, VSAT, VNUS, WTS, WWWW, XL

Wednesday, February 11, 2009
Before: AGU, AYE, ECOL, MT, BCE, CATM (?), CCE, CYBI (?), DVA, DF, FORR, GWR, GENZ, GNA (?), IR, JNY, KBW, ID, LNCE, LVLT, LIOX, MAC, MMC, MXGL, MTOX, MICC, NICE, PFCB, RAI, SRP (?), SPIL (?), SBGI, SKYW, TLKC, GTS, VAL (?), WXS
During: -
After: ATVI, AEA (?), AEIS (?), ACL, ARRS, AUDC, BMR, BWLD, CBM, CMG, CCRT (?), SCOR, CLB, OFC, CPII, CYMI, DFG, DW, DFT, EGP, EAC, EQIX, RE, FARO (?), GGP (?), GIL, GXP, GSIC, HIW, INSP, ICO, IRBT, JAH, KNXA, LVS (?), LPSN, LOOP, MERC, MOH, NTAP, NHWK (?), OSUR, PACR, PVA, PAA, PPS, STR, O, RNR, SQNM, SNWL, SPRT, SMMX, TLEO (?), TCO, TEX, TWPG, TQNT, WSH, ZGEN

Thursday, February 12, 2009
Before: EYE (?), AET, ALDN (?), ALXN, ALLT, ARIA, ATRO, BWA, CACH (?), CPLA, CBZ, FUN, CHLN (?), CBR (?), KO, DHT, ECL, EMS, ECA, NPO, ENTG, ENZN (?), FCL, GEO, GLG, GBE (?), HPY, HRP (?), IRC, JRN, LH, LIFE, LUFK, CLI, MAR, MLM, MAS, MFA (?), MNTA, NXY, NOVA, NRG, NWN, OZM, ZEUS, ORB (?), OFG (?), GLT, PTC (?), PTI, PTEN, MALL (?), PCH, PDS, PGN, QCCO, QLTY (?), RSH (?), RGC (?), REV, RTIX (?), SCG, SNN, SRI, STRA, ELOS, TASR (?), TDC, ULBI, VTR, VIA.B, WMI, WATG (?), YTEC
During: MNTG (?)
After: AW (?), ALNY (?), ACAP, AMKR, AGII, CAR (?), BIDU (?), BBND, BJRI, COG, CPKI, CBOU (?), CEPH, CAKE, COBZ, COGO, CSTR, DAC (?), DCT, PROJ, DRYS (?), EHTH, ENH, GDI, GXDX (?), GGC (?), GKK (?), HNSN, HPT (?), ICXT (?), NSIT (?), MFE, MPWR, NRP, NTGR, OFIX, PNRA, PEET, PLAB (?), PRAA, PRO, RACK, RADS (?), RNWK, SONO, SPRD (?), STMP, SHO, SXCI (?), TTGT, TK (?), KNOT, THS, USTR, VCLK, WYNN (?), XNPT

Friday, February 13, 2009
Before: ANF, ALE, BAM, CTSH, ENB, PEP, WYN
During: -
After: CCJ, SPF


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 Remains Weak into the Weekend

Market Remains Weak into the Weekend

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)


Good day! A short note to start off with this morning: I received word early Sunday morning that my maternal grandmother passed away, so I'm heading to rural Iowa this week to attend the funeral. As a result, I'll be gone for the remainder of the week with limited internet access. I will, however, be online for my webinar on Tuesday, so please stop by. You can join it free by registering at http://www.ise.com under education and then webinars. I'll be resuming my Market Action Letter again this coming weekend since I'll be home once again on Friday. Thank you to everyone that has already sent me kind emails and warm sympathies! I really appreciate them!

Nasdaq Composite ($COMPX)


The market looked very favorable for a stronger run heading into last week, but it was beaten down severely following the Fed rate announcement on Wednesday. By the time the market closed on Friday it had given up its gains from the first half of the week. A large portion of those losses occurred on Friday. The indices opened slightly higher into the bell, but the 15 minute 20 period simple moving averages and 5 minute 200 smas were hitting at that time and these resistance levels held very well. The indices quickly turned lower and continued steadily into 10:30 ET. The pace then slowed on the larger time frames with the creation of a longer correction off support and continuation lower into 11:30 ET.

The market action mid-day was not very strongly biased to begin with. The short term pace into the 11:30 ET lows was still sharp, even though the slightly lower low began to shift it on a larger scale. With such shifts, however, a third low is quite common. This means two slightly lower lows. Since the 5 minute 20 sma zone was the initial resistance on the 10:30 bounce, it was logical to suspect this to act as resistance a second time around. If the market was planning on hitting that third low then it would have used that resistance zone to kick off the move.

The resistance itself hit at the same time as the 12:00 ET correction period, however, there was no increase at all in volume when the market attempted to hold that resistance level and turn lower. This created a very awkward Phoenix type of pattern out of noon since the market technically still hugged along the 5 minute 20 sma even though the downside with the congestion was sharper than the upside. The way the Phoenix formed would have made it difficult to have a great deal of confidence in it since there was only one low within the move off the 5 minute 20 sma at noon. This meant that a slightly higher high soon thereafter could have easily been just part of a larger continuation pattern on the downside. Even though it looks like it could have been a buy trigger, the risk would have been higher than average.

Dow Jones Industrial Average ($DJI)


A lower risk buy setup formed when the first move of the afternoon hit resistance around 12:15 ET and based into 13:00 ET. The market based on a 5 minute time frame before breaking higher at the correction period. There was still a risk though because the base itself once again only had one easily identifiable low. Despite this drawback, the market formed a third wave higher on a 5 minute time frame. This took the market into the upper downtrend channel line and 15 minute 20 sma resistance. This level held very well and combined with the shorter term trend exhaustion and light mid-day volume to form a strong reversal into the final 2.5 hours.

When the market turned lower, it found support from the morning lows in the S&Ps and Dow and attempted to form a 15 minute 2B. The sharper downside pace held the bias and instead the market only crept higher. This led to the development of a 15 minute, intraday 2-wave continuation short setup into the final 90 minutes of trade. The 15:30 ET correction period held, but the market continued lower in afterhours trade going into Monday morning.

S&P 500 ($SPX)


Decliners outpaced advancers by about 3 to 1 on the NYSE, while they beat out gainers by approximately 9 to 4 on the Nasdaq on Friday.

The Dow Jones Industrial Average ($DJI) closed lower on Friday by 148.15 points, or 1.8%, at 8,000.86. For the month of January the Dow shed 8.8%. This made it the worst January on record for the Dow. The second worst was an 8.6% decline in 1970. In Friday's session on Boeing Co. (BA) (+3.93), J.P. Morgan & Chase (JPM) (+0.31%), and American Express (AXP) (+0.12%) posted gains. Losses were led by Citigroup (C) (-8.97%), Alcoa (AA) (-7.70%), and Procter & Gamble (PG) (-6.39%). PG's losses came on news that it missed its quarterly profit expectation and that the company lowered its targets for the fiscal year.

The S&P 500 ($SPX) fell 19.26 points, or 2.3%, and closed at 825.88 on Friday. For January as a whole the index fell 8.6%. This was also the worst January for the S&Ps. The second worst was a 7.6% decline in 1970.

The Nasdaq Composite ($COMPX) fell 31.42 points, or 2.1%, and closed at 1,476.42. The Nasdaq did not perform as poorly in January as in the other indices, but the result was still a dismal decline of 6.4%.

http://www.swingtrader.net

Since the market formed a reverse "V" type of reversal on a 90 minute time frame over the past week, it is a bit difficult to tell how this will play out in the larger daily bias. The weekly bias is a slower correction from the large monthly decline, but this can mean a lot of back and forth on shorter time frames like the daily. There is the potential for a 90 minute 2B into Monday where the market puts in a slightly lower low as compared to last week. This might need to be followed by a third low, however, in order to adequately reverse the price action. "V" lows and reverse "V" highs will typically favor trading range action, and this will mean that the highs from this past week will be harder to break right now.


Economic Reports and Events This Week

Monday, February 2, 2009
8:30 a.m. Dec Personal Income: Expected: -0.4%. Previous: -0.2%.
8:30 a.m. Dec Personal Spending: Expected: -0.8%. Previous: -0.6%.
10:00 a.m. Dec ISM Manufacturing Index: Expected: 32.0. Previous: 32.9.
10:00 a.m. Dec Construction Spending: Expected: -1.0%. Previous: -0.6%.

Tuesday, February 3, 2009
7:45 a.m. ICSC Chain Store Sales Index For Jan 31: Previous: -1.8%.
8:55 a.m. Redbook Retail Sales Index For Jan 31: Previous: -2.6%.
10:00 a.m. Dec Pending Home Sales: Expected: 0.0%. Previous: -4.0%.
4:30 p.m. Jan 30 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For Jan 31: Previous: -54.

Wednesday, February 4, 2009
8:15 a.m. Jan ADP Employment Survey: Expected: -508K. Previous: -693K.
10:00 a.m. Jan Non-Manufacturing Index: Expected: 39.0. Previous: 40.1.
10:30 a.m. Jan 30 US Energy Dept Oil Inventories

Thursday, February 5, 2009
8:30 a.m. Initial Jobless Claims For Jan 31 Week: Expected: +2K. Prevous: +3K.
8:30 a.m. 4Q Productivity: Expected: +1.5%. Previous: +1.3%.
8:30 a.m. 4Q Unit Labor Cost: Expected: +2.5%. Previous: +2.8%.
10:00 a.m. Dec Dec Factory Orders: Expected: -3.2%. Previous: -4.6%.
10:00 a.m. DJ-BTMU Business Barometer For Jan 23: Previous: -1.2%.

Friday, February 6, 2009
8:30 a.m. Jan Non-Farm Payrolls: Expected: -525K. Previous: -524K.
8:30 a.m. Jan Unemployment Rate: Expected: 7.5%. Previous: 7.2%.
3:00 a.m. Dec Consumer Credit: Expected: -$3.5B. Previous: -$7.9B



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Key Earnings Announcements This Week:

Monday, February 2, 2009
Before: BEAV, CPO, DVD, DSPG, DEP, EPD, FSNM, HAE, HUM, IPSU (?), MAT, OHB (?), PJC, ROK, SPP, SYY
During: -
After: ACTU, AFL, APC, ARRY (?), ATHR, BPL, CCK, FMD, HOLX, ICUI, ITMN (?), LDSH (?), MKL, MSTR (?), MSPD, OTTR, PRE, PBI (?), PCL, RCII, SNDK, TSRA, TRID, UNCA

Tuesday, February 3, 2009
Before: AFAM (?), AMSC, AXE, ADM, ADP, AVP, BP, CAM, CE, CEVA, CME, COCO, CMI, DOW, DHI, EMR, ETR, HW, HNT, HEP, IACI, KSU, LDR, LPX (?), MMP, MAN, MRO, HZO, MLM (?), MDU, MRK, MOT, MYGN, NNN, NNDS (?), NOC, ORCT, PTRY, PNR, PBG (?), PRGO, PNC, PEG, COL, RTI, SGP, SMG, TECH, TPP, TDG, TYC, UPS, VSAT (?), WEC
During: -
After: ACE, ACTL, ADVS, ADS, AJG, ATO, BYI, BRE, CTX, EW, ERTS, FOE (?), FISV, GHDX, SOLR, IKAN, ILMN, IVAC, JKHY, JLL, LEG, MEE, MET, NLC, NETL, NBIX, NEWP, PSEM, PEC, PXD, PLNR, RSYS, RENT, RVBD, SLGN, SUMT, TZOO, TRMB, TUP, UTI, UNM, USNA, VASC, VIGN, VOCS, DIS, YUM

Wednesday, February 4, 2009
Before: ALU, AXB, AGN, AHCI (?), ALVR, ARJ, ARM, ATMI, BCO, BRS, CACH (?), CATM (?), CRNT, CLX, CGX, DWSN, DVN, DHX, FNF, RAIL (?), GLG (?), GR, NRGY, ITT, KEI, KFT, LAZ, LFUS, MKTX, MDCI, MKSI, MNC (?), MGAM, MWIV, NOV, NSTC, NI, NJR, PAS, PM, RL, PPL, ROH (?), R (?), SLE, SVVS, SCUR (?), SLAB, SNA, TMO, TNB (?), TWX, TWC, WIN, WWW
During: -
After: AKAM, AGNC, NLY (?), AIZ, ATML, ATW, AVB, BMI, BBBB, BMC, BWY, CBL, CSCO, COHR, CVLT, CNQR, EXBD, DTLK, XRAY, DLB, DSCM, DCP, WIRE (?), EOG, EPIC, EFX, EQR, FMC, HAIN, HAR, HRS, HSTX, HRC, HHGP (?), IRF (?), LVS (?), MTSN, MEAS (?), MDTH, NWS.A (?), EGOV, NVLS, OIIM, ONNN, OPNT, POWI, PRU, PHM, RAX (?), REG, RJET (?), RNOW, SGMO (?), SCSS (?), SFLY, SSTI (?), SPTN, SFN, SPRD (?), SUN, SYMM, TLEO (?), TMA (?), THQI, TMK (?), TBI, UFPI (?), VARI, V, WGL

Thursday, February 5, 2009
Before: ABMD (?), ATG, ALDN (?), LNT, ANR, AHII, AHG (?), STST, ARTG, ASPM, BDC, BLC, BHE (?), BPO, BW, BG, BKC, CRR, CAH, CSL, CENT (?), CHD, CI, CBB, CINF, CNMD, CUB (?), DTPI, DO, DRAD, UFS, DHT (?), DDE (?), DUK, EXP, ELNK, ELON, RDEN, EL, SSP (?), , FLIR, FLO (?), IT, HGG, ITWO, IEX, RX, IDEV (?), IPCC, IFF, KBW (?), K, KIM, KNL, KVHI, LB (?), LII, LZ, MHO, MAG, MA, MMS, MNI, MF, MEND, MCO, MPS, NCR, TNDM, NOOF (?), CHUX, OHI (?), OPXT, OFG (?), PMTI, PARL, PTI (?), PCCC (?), MALL (?), PDX (?), PENN, POL, PBH, QCCO (?), RVSN, ROLL, RGC (?), RBC (?), RSTI, RTIX (?), SBH (?), SNI, SIRO, SNN (?), SON, SE, SPR, SRI (?), SPH, TEN, THOR (?), TBL, WBC, WMG, WW, WU, WNS, WATG (?),
During: MNTG (?)
After: APKT, AATI, AEIS (?), ALKS (?), ALNY (?), AMX (?), ATR, AGO (?), AVNX, BEZ, RATE, BEBE, BLKB, CENX (?), CPHD, COHU, CPII (?), CCI (?), DAC (?), DBTK, ENTR, ESE, ELSR, FALC, FEIC, GNW (?), GCOM (?), HIG, HWAY, NSIT (?), IN, XXIA, JDSU, LQDT, LMNX, MTD (?), MCRS, MAA, MIL, MTX, MFLX (?), NFG, NFS (?), NOA (?), , OMTR, OMI, PDFS, PNSN, PMC, PFWD, PWER, PWAV, RAH, RMD, ROP, RTEC, SLRY, SIMG, SIMO, SSD, SWKS, SNIC, SEP, SPC, SRX, SRCL, SXCI (?), SNCR, TWLL, TKLC (?), TSYS, TMRK, TRLG (?), ULTI, VRSN

Friday, February 6, 2009
Before: ANDE, AOC, AIV, BECN, BIIB, SUR, CREL, HPOL, HI, KBALB, LPNT (?), NUS, SXT, TE, VVI, WY
During: -
After: -


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.