Market Remains Full of Pleasant Surprises for the Bulls

Good day! The market continued to impress with its resilience on Thursday. The session began with a strong upside gap that took it to the upper end of the trading range on the 60 minute time frame. Once again this shifted the momentum within the range itself back into the favor of the bulls. The market held up very well in the first 15 minutes of trade and soon triggered a buy setup when those 15 minute highs broke. The pace was on the choppy side, but it was steady throughout most of the morning. It wasn't until the indices pulled back off highs around 11:30 ET that the market began to create anything larger than a small 2-minute bull flag.

Dow Jones Industrial Average ($DJI)


The volume was light throughout morning trade, but even more so heading into noon. With the Fed's interest rate verdict on the horizon in the afternoon there was not a lot of incentive to do much other than sit and wait. A precursory breakout attempt took place out of the 13:00 ET correction period, but it wasn't until the news hit at 14:15 that the rates would again be left unchanged.

The market was initially relieved by the new and broke higher on a 5 minute time frame, but it whipped back almost as quickly and then based along the 5 minute 20 sma support. This created an Avalanche™ short setup on the 5 minute time frame that triggered a breakdown for a continuation pattern into the final 45 minute or so of trade. The session ended at morning support, rounded off afterhours, and rallied back to the intraday highs in the early morning hours of premarket trade on Thursday.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) rose 168.78 points, or 2.1%, to close at 8,185.73 on Wednesday. It would have been substantially higher had it held onto the intraday gains. Citigroup (C) led the gainers with a rally of 7.96%, followed closely by Disney (DIS) with a gain of 7.69%. Bank of America (BAC) and JPMorgan (JPM) came in third and fourth. Despite the gain, a couple Dow components failed to close in positive territory. The losses were minor and led by Verizon (VZ) with a decline of 1.78%.

The S&P 500 ($SPX) rose 18.48 points, or 2.2%, and closed at 873.64. Crude oil futures closed higher at $50.97 a barrel after closing at $49.92 the day before.

The Nasdaq Composite ($COMPX) rose 38.13 points, or 2.3%, and it closed at 1,711.94. The Nasdaq gains meant a new high for the year in the index and its best close since early last November.

Nasdaq Composite ($COMPX)


The premarket rally creates a high probability for an upside gap into Thursday morning. We do not have any confirmation pattern forming to give the market a trigger for any larger daily correction, but gaps in the indices are one of my favorite things to watch. This is particularly true of the larger-than-average gaps we have seen lately. The general strategy is to mark 15 minute highs and lows and take a position in the direction that range breaks. Of course the odds are much higher if there is a larger time frame support or resistance level favoring the direction of the break and a larger price pattern. Another major pro is when the indices trade in a range instead of moving steadily higher or lower in the first 15 minutes of the day. A good example is the 5 minute chart of the Nasdaq from Wednesday.

Market Remains Virtually Unchanged on the Week

(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! Volume remained light in Tuesday's trade and the market didn't manage to get much action in. Instead, the indices, and the Dow in particular, remained in a narrow range throughout the session. As on Monday, the market gapped lower into the opening bell. The extreme gap was followed by a buy trigger to signal the likely closure of the gap soon after the first 15 minutes of trade had passed. The Nasdaq was a little bit weaker to begin with, but it also turned back around. When the consumer confidence and manufacturing data came out at 10:00 am ET the indices popped and the gap quickly closed.

Dow Jones Industrial Average ($DJI)


The market extended its early morning rally past the closure of the gap, but the pace of the upside slowed and this created a momentum shift into the previous 15 minute highs. When the channel from that shift broke lower it triggered a price reversal out of the 10:45 ET correction period. The momentum shift was not substantial enough to allow for a sharp downside reversal, however, and instead the market crept lower into noon.

S&P 500 ($SPX)


When the 12:00 ET correction period hit the indices were testing support from the 5 minute 200 sma in the Nasdaq and price support from prior 15 minute lows in the S&Ps and Dow. The corrective channel soon broke higher, but the time it took for that correction to form between 10:45-12:00 was not long enough compared to the morning rally to allow the indices to easily break to new highs. Instead the market tried to lengthen the correction by pulling higher and then congesting just short of the day's highs.

The Nasdaq was not keen on going along with this plan and a 15 minute Avalanche™ triggered out of the 13:00 ET correction period while the S&Ps and Dow maintained an upper-level range. This range broke higher following the 14:00 ET correction period, but it failed to maintain the momentum of that breakout and turned over again less than 30 minutes later. The turnover gained momentum on the downside in the final hour of trade and the market took back all of its gains to close in negative territory.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 8.05 points, or 0.1%, to close at 8,016.95 on Tuesday. This was a rather mild loss given the fact that nearly two-thirds of the Dow's 30 index components closed in negative territory. General Motors (GM) alone fell 11.27 points. This was followed by an 8.63% loss in Bank of American (BAC) and a 5.86% loss in Citigroup (C) after the government announced that it wants to see both companies raise more capital. On the other end of the spectrum was IBM, which posted a gain of 1.99% as the Dow's best performer after it raised its dividend by 10%.

The S&P 500 ($SPX) fell 2.36 points, or 0.3%, and closed at 855.16. Crude oil futures closed lower for the session at $49.92 a barrel following Monday's close of $50.14 a barrel in New York. In earnings news, U.S. Steel (X) posted a larger-than-expected loss and shares fell 5.6% to close at $26.15.

The Nasdaq Composite ($COMPX) fell 5.60 points, or 0.3%, and it closed at 1,673.81. Vertex Pharmaceuticals (VRTX) posted a second day of strong gains to lead the Nasdaq -100. It rose 9.86% after breaking strong higher on Monday. It was followed by a 3.96% gain in Nasdaq-100 component Life Technologies (LIFE). Dish Network (DISH) posted the largest loss in that index, falling 5.04% to trigger a daily short setup with good swingtrade potential. Verisign (VRSN) is another daily chart with strong downside potential. It's been stuck in a range since last year at lows and is starting to favor the lower end of that range for a breakdown.

The daily charts in the indices have maintained the pattern we have been following for well over a week now. They are looking a lot like DISH did prior to its breakdown on Tuesday. I remain very cautious on the long side and my daily outlook remains the same as it has for the past week. The momentum is still more bearish, but if the upper end of this daily channel does break then we are looking at the likely return to the year's highs in the Dow and S&Ps. Should the momentum continue to roll over at these highs, however, the indices can easily gain pace on the downside and once again test the year's lows. It's a matter of monitoring the pace development at this point for a breakout.

I remain in favor of a downward correction, but there are enough cons to lead me to seek individual stocks and securities that display stronger versions of the same short strategy that can outperform the market should the market trigger in that direction and be less influenced if the pace within the range shifts and we see a break higher even though this is less likely.

Tug-of-War Continues at Monthly Highs

(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! Well, it perhaps wasn't the best day to be in Mexico yesterday, but hopefully your day still turns out well! Swine-flu has been the top news story of the week with deaths estimated at around 200 at present (depending upon which news service you read) and infections popping up now in several countries outside Mexico and the U.S. The good news is that it appears to respond well to treatment and it's uncertain what impact the outbreak has really had on the overall market. Keep in mind that the markets are already trading at strong price resistance levels, so it doesn't take much push to create a little panic. In addition to the spread of the swine-flu out of Mexico, the country was hit with a rather sizable earthquake mid-day. Many observers described Mexico City as being as close to a ghost town on Monday as possible for a city of its size.

Dow Jones Industrial Average ($DJI)


Despite the downbeat tone heading into Monday, the market was testing strong 15 minute support when the regular trading session began. I've shown these levels on the charts in dark green. The gap took the market all the way back to price support from Friday's open in the Nasdaq futures and Thursday's close in the Dow futures. The gap came on the heels of a reversal off late afternoon highs in the indices on Friday when the market accelerated a late day reversal into the closing bell. This extended the market on the downside and also made it easier for the market to hold the 15 minute support levels.

The gap into Monday morning closed very quickly. My typical gap strategy created a buy trigger soon after the first 15 minutes of the day had passed. The drawback was that the opening range was very side, so the market ran into resistance before risk levels could be covered. Even though the market held the opening lows on the correction out of 10:00 am ET, this correction took back at least 50% of the morning's gains in all three of the major indices before turning back around out of the 10:15 am ET correction period.

The market's upside pace out of 10:15 am ET remained strong, if not stronger than the opening upside, but the move did not last as long. The indices hit a second resistance zone when the Dow futures closed their morning gap. A small pause took place for about 10 minutes and then a third and final push took the S&Ps and Dow back into prior 15 minute highs from last week. In the meantime, the Nasdaq managed to break Friday's highs by a hair to create a momentum reversal short pattern on the 15 minute time frame. The three waves of buying on the 5 minute time frame created a similar pattern with a pennant into the 11:00 ET correction period.

S&P 500 ($SPX)


Although the market pulled back quickly into 5 minute 20 sma support, particularly in the Nasdaq, and the overall pace of the upside was also slowing, the rally still remained stronger than average. This made it difficult for the indices to get into sell-a-thon mode right away. The indices instead held the 5 minute support and chopped higher on declining volume into noon. By the time the 12:00 ET correction period hit the S&Ps and Dow were retesting the morning highs at a much more gradual pace than the previous test and the Nasdaq was squeezing the stuffing out of its 5 minute 20 sma. The reversal patterns that were created from this action triggered out of that 12:00 ET correction period and a steady, yet persistent, selloff developed. Initial support around 13:00 ET gave way less than 30 minutes later and the selling continued into the 14:00 ET correction period.

By 14:00 ET the indices were back to earlier support on the 15 minute time frames. The upside-down "V" formation or mountain formation that was created throughout the morning and first half of the afternoon made a trading range on the 15 minute charts the most likely action for the second half of the afternoon. This range actually continued into afterhours trade and a 15 minute Avalanche™ pattern emerged that triggered another strong selloff heading into the final two hours of all-sessions trading on Monday. When overseas activity increased at 3:00 am ET on Tuesday the futures market took another plunge to extend the afterhours selloff and led it into the typical breakdown target zone to create an equal move on the 15 minute charts.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 51.29 points, or 0.6%, to close at 8,025.00 on Monday. The S&P 500 ($SPX) fell 8.72 points, or 1.0%, and closed at 857.51 on Monday. The Nasdaq Composite ($COMPX) fell 14.88 points, or 0.9%, and it closed at 1,679.41.

Monday's action confirmed the primary bias of the daily charts by displaying the inability to push through the upper channel bands in the indices on this last attempt. The change in momentum intraday in favor of the bears continues to support the market's desire to form a larger daily correction off highs, but until the lower channel on the daily time frame breaks (the 20 sma zone) then the indices will still lack larger confirmation. The Nasdaq is going to have the most difficult time with this, while the Dow should have the easiest.

Congestion Continues into 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! So far this earnings season has proved a surprise for many market devotees. Although the results have been overwhelmingly negative as expected, more companies are reporting stronger-than-expected earnings than the other way around. The market has done a favorable job of holding up as a result. Heading into this season the indices have been poised for a daily price correction. The pace of the buying had slowed and the weekly charts were showing a great deal of overlap from one bar to the next into the strong daily resistance we've been keeping an eye on for the past two months from late January to early February price congestion in the Dow and S&Ps. Lighter volume throughout this shift in momentum also suggested that the bulls were struggling to push to new highs.

Dow Jones Industrial Average ($DJI)


In Friday's action, the market tried to dispel the notion that it was out of steam by pushing once again into highs and establishing new ones for the year in the Nasdaq. The trip was a rocky one, however, and not very convincing. After a slight gap to the upside, the indices held and fell into a range intraday. The gap had extended the previous afternoon's ascent and left the market exhausted from the short-term run.

The opening range broke higher around 10:00 am ET. New home sales fell 0.6% in March, while January and February sales were revised higher. The median sales price of new homes sold in March was $201,400, up from $200,900 in February. The market continued to push higher throughout the morning following this news, but the price action was choppy and volume was light. All three of the major indices managed to push through the mid-week highs, but at noon the volume sharply dropped and the indices began to congest along the 5 minute 20 sma.

The indices triggered a short intraday at approximately 13:30 ET. Then they based under the 5 minute 20 smas. At 14:00 that base gave way very quickly with the help of a little bit of news and triggered my aptly-named Avalanche™ continuation short setup. This took the Nasdaq back to opening highs and the S&P to morning lows before bouncing back. The Federal Reserve stated that most banks that have been tested for stress have enough capital to survive.

The market was able to make new highs into 15:00 ET, but the upside pace was still weaker than the flush lower and the market rounded off a intraday highs in the final hour of trade to create another 5 minute Avalanche™ into the closing bell. This time around the downside resumed afterhours and into Sunday's futures trading, although the overnight trade managed to find support into midnight the afterhours congestion between Thursday and Friday's sessions.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) rose 119.23 points, or 1.5%, at 8,076.29 on Friday. The index closed lower by 0.7% for the week after 6 consecutive weeks of gain. For the year-to-date the Dow remains down 8% with 23 of the Dow's 30 index components still negative on the year.

The S&P 500 ($SPX) rose 14.31 points, or 1.68%, and closed at 866.23 on Friday. The index fell 0.4% for the week and is still down 4.1% on the year. Financials, however, have outperformed the rest of the S&Ps. The Select Sector SPDR-Financial (XLF) is up 77% in the past 7 weeks. Crude oil futures ended the week at $51.55 a barrel, down 1.32% on the week. Oil companies will get some added action this coming week with earnings due out towards the end of the week in both ExxonMobil (XOM) and Chevron (CVX).

The Nasdaq Composite ($COMPX) rose 42.08 points, or 2.55%, and it closed at 1,694.29. The Nasdaq closed higher for the week by 1.3% and is up 7.4% on the year. Technology shares have done extremely well so far this year. Amazon.com (AMZN) is up 64.7% on the year, while Apple (AAPL) is up 45.2%, and Broadcom (BRCM) is up 42.7%.

Nasdaq Composite ($COMPX)


My longer term outlook remains the same as last week as we head into this one. The indices are still rounding off at highs, although Friday's action was stronger than I had anticipated. I will nevertheless continue to treat upside cautiously at this point unless the upper channel from the current trend manages to break. Should this actually occur, then the next resistance would not be until the year's highs for the Dow.

If the upper channel broke, then it will be as if the market treated the slowdown in the trend from late March into now as more of a congestion zone than a trend move and it would then have the room to put in an equal move on the breakout move as compared to the strongest part of the rally off the year's lows. This is still the less likely outcome, but not one I will rule out due to the additional cons we've already looked at over this past week that include a faster slowing of the trend into the end of last month than is ideal for a strong momentum reversal and the inability of the indices to continue to hug the 20 day sma coming off the descent into last week.

Economic Reports and Earnings Events Apr 27-May1

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Economic Reports and Events This Week

Monday, April 27, 2009
10:30 a.m. Apr Dallas Fed Mfg Production Index: Previous: -22.3.

Tuesday, April 28, 2009
7:45 a.m. ICSC Chain Store Sales Index For Apr 24: Previous: -0.4%.
8:55 a.m. Redbook Retail Sales Index For Apr 24: Previous: +1.5%.
9:00 a.m. Feb S&P/Case-Shiller Home Price Index: Previous: -19%.
10:00 a.m. Apr Conference Board Consumer Confidence: Previous: 26.
10:00 a.m. Apr Richmond Fed Manufacturing Index Previous: -20.
4:30 p.m. API Oil Industry Report For Apr 24
5:00 p.m. ABC/Wash Post Consumer Conf For Apr 24: Previous: -47.

Wednesday, April 29, 2009
7:00 a.m. Mortgage Applications Refinance Index: Previous: +7.7%.
8:30 a.m. 1Q Advance GDP: Expected: -4.6%. Previous: -6.3%.
10:30 a.m. U.S. Energy Dept Oil Inventories For Apr 24
2:15 p.m. Apr FOMC Interest Rate Decision

Thursday, April 30, 2009
8:30 a.m. 1Q Employment Cost Index: Expected: +0.5%. Previous: +0.5%.
8:30 a.m. Initial Jobless Claims For Apr 25 Week: Expected: +5K. Previous: +27K.
8:30 a.m. Mar Personal Income: Expected: -0.2%. Previous: -0.2%.
8:30 a.m. Mar Personal Spending: Expected: -0.1%. Previous: +0.2%.
9:45 a.m. Apr Chicago PMI (Adjusted): Expected: 34.5. Previous: 31.4.
10:00 a.m. DJ-BTMU Business Barometer For Apr 11: Previous: -0.7%.
10:30 a.m. EIA Natural Gas Inventories

Friday, May 1, 2009
9:55 a.m. End-Apr Reuters/U Mich Sentiment Index: Expected: 61. Previous: 57.3.
10:00 a.m. Apr ISM Manufacturing Index: Expected: 38. Previous: 36.3
10:00 a.m. Mar Factory Orders: Expected: -0.3%. Previous: +1.8%


Key Earnings Announcements This Week:

Monday, April 27, 2009
Before: ACV, ARLP, BEAV, BWP, CHKP, GLW, DEP, ENR (?), EPD, GLF, HUM, IMA, LO, ONB, OMC, PVTB, QCOM, SII, SOHU (?), SYNT, TKR, TZOO, VZ, WBC, WHR
During: -
After: RNT (?), ACTS (?), ALB, AXS, BIDU, CLDN, CMP, DVA, EDR, EW, ELX, FNF, FADV, FR (?), HBI, HGR, HMA, HTLF, HXL, HIMX (?), ININ, IVAC, JEC, LDSH (?), XPRT, MTW, MAS, MTH, MSPD, MRH, OLN, PRXL, PRE, PNSN, PCL, RGA, RCII (?), RKT, SGK (?), SLG, SNWL, SONO, SWN, TUES, TYL, UHS, VECO, WRB, WRE, WRI, WMGI, XL

Tuesday, April 28, 2009
Before: CAS, AG, AMB, AMFI, AMED, ECOL, AM, AXE, ARM (?), AVY, BDX, BMS (?), BCO, BMY, CRS (?), CE, CNC, CRDN, CCE, CVG, CPO, CVH, DIN, ELNK, ECL, EME, EVVV, FMER, FPL, BEN, FDP, GKSR, GPI, HCP, HL, HSII, HSP, IPG, KELYA, KLIC, LDR (?), LAZ, LCAV, LVLT, LECO, MHP, NXY, NWPX, ODP, OXPS, ORB, GLT (?), PCAR, PMTC, MALL (?), PCZ, PFE, PCH, QLTI, COL, RTI, SMG, SSW, SPAR, TECH (?), TFX, TLAB, TPP, X, UA, VLO, VSH, WDR, WAT
During: -
After: ACE, ACTL, ADVS, ATAC, ACLI, ANAD, AJG, BLDP, BBSI, BEC, BTUI (?), BKI, BWLD, COG, CRI, CBI, CERN, CTV, CCUR, CSGS, CTS, DAC, DBTK, DWA, ETFC, EGP, EHTH, EAC, ENTU, EXAC (?), FALC, FIS, HTZ, HTCH, JLL, KEYN, LIFE, MEE, MRCY, MMSI, MEOH, MPWR, NLC, NATI, NAL, PNRA, PEET, PFWD, PRAA, PSYS, QCOR, RSYS, RRC, RFMD, RCKY, SBX, SMTL, SSTI, SRCL, SUMT (?), SUNH, JAVA, SPN, SDXC, TSS, TRMB, TRMK, ULTI, USNA, USU (?), VFC, VIGN, VISN, WTS, WBSN, ZRAN

Wednesday, April 29, 2009
Before: ADRL, AET, AMG, AKNS, ABK (?), AMT, ASCA, MT, ARW, ABG, ASPM, AVA, BHI, ABX, BDC, BLT (?), BKC, CNP, CBR, CTCM (?), DPZ (?), ENDP, EEFT, FCN, GD, GWR, GT, HES, HEP, ICLR (?), IACI, JNY, KEI (?), LEA (?), LCRY (?), LAD (?), MPX, MKTX, MWV, MHS, MED, MDP, MTG, MCO, MPS, NJR, NYB, OIIM, ZEUS, PTI, PAS, PX, Q, RGS, RAI, ROK, ROC, RDS.A, RES, RTIX, RBCN, SAP, SVVS, SEE, SI, SLAB, SPIL (?), SO, SPW, SSYS, TLM, TXT, MDCO, TSCM (?), TWX, TWC, TEL, UMC, USAP, VPHM, WMI, WRLD, WXS, WYE, WYN
During: BOKF
After: ABAX, AEA, ALF, AEM, AKAM, AMSF, AMKR, ARRS, AIZ, ATML (?), AVB, AXTI, BEZ, BARE, BRY (?), BMR, BXP, BDN, CBT, CAI, CDNS, CWT, CAVM, CBG, CBL, CIR, CRUS, CTXS, CLF, CNQR, EXBD (?), CVD, CRAY (?), CCI, DRIV, DNEX, DLLR, DRC (?), DSCM, DST, DTE (?), DRE, DNB, EFII, EQR, ESS, RE, ESRX, FSLR, FLEX, FLS, FORM, GGP (?), GNK, GMR, GERN (?), GMKT (?), GMCR, GSIC, HAR, HIW, HGSI, INSP (?), IFSIA (?), ICO, ITRI, JDSU, KALU, KEX, KONA, LVS (?), LOOP, LSI, MANT, MDAS, MOH, NAVG, NBIX (?), NEWP (?), NUHC, NTRI, OII, ODSY, OKE, OKS, OPWV, ORLY, OSIP, OI, PSEM (?), PLXS, PLD, STR, O, RNR, RJET (?), RNOW, RYL, SGMO, SIGI, SFLY, SKX, SAH (?), SFN, SBUX, STM, SRDX, SMMX, TCO, TER, TTEK, TWPG, TLGD, CLUB, TRN, URI, UAM, UNM, VARI, VAR, VIMC (?), VIRL, V, WLT (?), WCAA, WGL, WWL, WSH

Thursday, April 30, 2009
Before: FLWS, EYE (?), ATG (?), LNT, AMAG, APU, APA (?), AWI, ARTG, ASH, AACC, AZN, ATN (?), BLC, BIOS, BWA, BC, BW, BBW, CACH, CCC (?), CALP, CRR, CAH, CBZ, CDI, CELG, CEDC (?), CTL, GTLS, CI, CINF, CMS, CMCSA, CITP, COCO, COV, CRY, CMI (?), DLR, DXYN, D (?), DDE (?), DVD (?), DOW, EK, ELMG (?), NPO, ENTG, EQT, ETH, EXPE, XOM, FAF, FORR, GM (?), GLS, GTIV, GEO (?), GTI, HS, HTV (?), HPY (?), HP, HOS, HURN, ICON (?), ICTG, IFLO (?), IPCC, IFF, IP, ITG, IWA, IRM (?), KBR, KSU, K, KIM, LB, LANC (?), LFUS, LKQX, ERIC, LOJN, LZ, MHO, CLI, MGLN, MGA (?), MRO, HZO (?), MSO, MBFI, MFA (?), MDS (?), MSA, MOT, MWIV (?), MYL, NNN (?), BABY, TNDM, NWL, NEM, NBL, NOVA, NRG, NUS, NS, NYX, OMX, OHI (?), OCR, OSK, OSIS, OC, PMTI (?), PTEN, PCCC (?), PEI, PPCO (?), PTEC, POZN, PDE, PG, QCCO (?), QUIX, RYN, RGC, RRI (?), REV, SWY, SRE (?), SEPR, SHPGY, SBNY (?), SLGN, SNN, SPNC (?), SPR, HOT, STRA, TSM, TEN, TBL, TRV, TWP, TRW (?), TYC, UGI, ULBI, UTHR (?), VCI, VIA.B, VIP (?), WSO (?), WPI, WMAR (?), WST, WMB, WPZ, XEL
During: -
After: APKT, ACTU, ACS, AXB, AIQ (?), ACAP, ANEN (?), NLY (?), AMCC, ARBA, ALC, ATHN, ATO, AVNX (?), BGFV, BMRN, BLKB, BPL, CAB, CAP (?), CLMS, ELY, CALD, CPT, BEAT, CBEY (?), CEC, CQB, CHH, FIX, CML, SCOR, CVTI (?), CW, PROJ, XRAY, DEPO (?), DLB, BOOM, ERES, ESLR, FARO (?), FISV, BGC, GXDX, GPRO, GFIG, GOL (?), HNSN (?), HIG, HVT (?), HMN (?), IDEV (?), IM, IDTI, TEG, IN, ITMN, LCRD, LQDT, MXIM, MFE, MET, MTD, MCHP (?), MCRS, MSTR (?), MIPS, MORN, MRT (?), NANO, NFG, NETL, NTCT, N (?), NR, NTLS, ORH, ASGN, ORCC, PCTI, PKI, PDGI (?), PMC, QLGC, RADS, RSG, SONE, SQNM (?), SWIR, SSD (?), FIRE, STNR (?), TLEO, TTGT (?), TWLL, TK (?), TSYS, TSRA, THOR (?), TGI, TTMI, UNCA, UDRL, USTR, VSEA, VPRT, VLCM, WYNN (?), ZIGO

Friday, May 1, 2009
Before: AGN, ALE, AEE, AXL, AGP, AOC, AIV, BPO, CRNT, CVX, CLX, SUR, ED, DF, FSS, FLIR, FO, HMSY, IBI, JRCC, KDN, LPNT, MA, MDU, NI, NWN, PPL, PFS (?), SPG, SRI, TTES, TE, VVI
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 Continues to Waver at Daily Highs

(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) rose 79.49 points, or 0.89%, at 7,957.06 on Thursday. American Express (AXP) (+7.93%), Bank of America (BAC) (+6.78%), and JP Morgan Chase (JPM) (+4.11%) topped the Dow's gainers on Thursday. Meanwhile, the downside was led by General Motors (GM) (-4.14%), Home Depot (HD) (-1.57%), and Citigroup (C) (-1.54%).

The S&P 500 ($SPX) rose 8.37 points, or 1.0%, and closed at 851.91 on Thursday. June crude oil closed higher by 1.3% at $49.50 a contract. May natural gas closed lower by 3.4% at $3.41 per contract.

The Nasdaq Composite ($COMPX) rose 6.09 points, or 0.4%, and it closed at 1,652.21. Both Amazon.com (AMZN) and Microsoft (MSFT) closed higher on the day following earnings.

Dow Jones Industrial Average ($DJI)


After the market turned sharply lower in the final hour of trade on Wednesday, it had a difficult time resolving that change in pace into the next morning. The indices opened relatively unchanged at the larger 15 minute support and then congested out of the open before pushing lower into 10:00 ET. Despite managing to bounce back into the 5 minute 20 sma resistance, this level served as very strong support and the indices again gave way to further selling into the 10:45 ET correction period.

Stronger support held when the market went for a third test of lows for the session at the same time as the 11:15 ET correction period hit. This was a stronger test of support on the 15 minute time frames and it also served to slow the pace of the overall selloff. The result was a momentum shift on the 5 and 15 minute time frames that is the most noticeable on the S&Ps and Dow. Both formed slightly lower lows to trap the bears and create 2B reversal patterns out of 11:15 ET. They followed this up with a stronger buy signal shortly after noon by hugging the 5 minute 20 sma on light volume to create a 5 minute Phoenix™ setup heading into the early afternoon.

S&P 500 ($SPX)


After the mid-morning reversal the market crept higher throughout most of the remainder of the session. Resistance hit initially around 13:30 ET, but the channel break merely led to a small bull flag and a slightly higher high an hour later. The indices then chopped back and forth into the close, although the moves on a 5 minute time frame were smooth enough to allow for decent daytrading.

Nasdaq Composite ($COMPX)


Friday brings with it March's durable goods orders and new home sales data, as well as earnings reports from 3M (MMM), Ford (F), and Honeywell (HON). The daily bias remains the same as it has throughout the week. The momentum is continuing to shift in favor of greater corrective action off this resistance level in the indices, but the pattern is still higher risk than it would have been had it rallied more strongly into the resistance in the first place. Nevertheless, despite the higher risk that a momentum reversal may not trigger or confirm a trigger, the Nasdaq is the one with the highest risk of failing to follow through. I remain more reluctant to commit on the long side and favor short-side action into next week. The Dow is forming a potential 2-wave short with a 60 minute Avalanche™ and it's this larger bias that I am going to be focusing on into the weekend.

Market Pace Continues to Slow

Good day! The Dow Jones Industrial Average ($DJI) fell 82.99 points, or 1.0%, at 7,886.57 on Wednesday. 8 of the Dow's 30 index components posted gains despite the overall decline. The leaders were Caterpillar Inc. (CAT) (+3.38%), Intel (INTC) (+2.02%), AT&T (T) (+1.82%), and Boeing (BA) (+1.77%). The downside was fronted by losses in Bank of America (BAC) (-5.71%), Pfizer (PFE) (-3.55%), Procter & Gamble (PG) (-2.61%), and McDonald's (MCD) (-2.48%).

The S&P 500 ($SPX) fell 6.53 points, or 0.8%, and closed at 843.55 on Wednesday. The S&P financial exchange-traded fund (XLF) fell 3.6% on disappointment from Morgan Stanley (MS) (-9%) when it failed to follow the trend of better-than-expected earnings amongst the top financial companies. It reported a net loss of $190 million, or $0.57 a share. Analysts had expected a loss of $0.08 a share. Crude oil futures closed slightly higher at $48.85 a barrel. It had closed at $48.55 on Tuesday in New York.

The Nasdaq Composite ($COMPX) rose 2.27 points, or 0.1%, and it closed at 1,646.12. The Philadelphia Semiconductor Index rose 4.3% on Wednesday. It is up 21% so far this year. The index took kindly to earnings in SanDisk (SNDK) which resulted in a gain of 13.4% in the stock. The earnings were still negative to the tune of a net loss of $0.48 a share, but this was better than the expected loss of $0.77 a share.

Dow Jones Industrial Average ($DJI)


The markets opened slightly lower on Wednesday morning after chopping around a great deal in premarket trade. The index futures started to roll over off premarket support into the opening bell, but it took nearly 30 minutes for the momentum to pick up. The market then surged higher for another 30 minutes, closing the gap from April 20th in the Nasdaq and returning to Monday's highs in the weaker Dow.

Volume died off as the market corrected, but the pace remained slow, so the 5 minute 20 sma held and the market pushed higher for a retest of the day's highs. This bull flag was earlier than would be ideal given the extent of the rally, so the zone of the morning highs still served as resistance. Slightly higher highs in the Nasdaq and S&Ps created a 2T reversal pattern by forming a bull trap above the original highs. This shift in pace allowed the indices to pull back rather strongly mid-day.

S&P 500 ($SPX)


This rapid back and forth action continued throughout the remainder of the session on Wednesday is typical given the placement of the market in the overall daily trend. The indices are at strong resistance after 6 weeks of upside, but the bulls are reluctant to give up. The 13:00 ET correction period has been a popular one lately, serving to turn the market sharply intraday. In Wednesday's session it hit as the market was testing support on the 15 minute time frame and the market formed a two-wave correction off that support over the next several hours. The initial wave was followed by a Phoenix™ continuation pattern out of the 14:00 ET correction period.

Corrective moves often have two waves, so the fact that the overall pace of these two moves higher on the 5 minute time frame was slower than the mid-day decline helped the market turn reluctantly lower once again in the final hour of trade. The indices were very choppy as they retested the morning highs, but when the 5 minute 20 sma gave way the pace increased dramatically and the indices continued to sell off into the closing bell. They hit support when the S&Ps tested premarket lows and Nasdaq Composite came into its 5 and 15 minute 200 sma intraday.

Nasdaq Composite ($COMPX)


Both Apple (AAPL) and eBay (EBAY) were higher afterhours on positive earnings, although the overall market didn't react much. The Nasdaq futures rose, but the S&Ps based and eventually that base gave way to further selling around 20:30 ET. Apple reported that it earned $1.33 a share in the second -fiscal quarter, up from $1.19 a year ago. Analysts had expected $1.09 a share. It reported revenue of $8.16 billion, up from the estimates of $7.95 billion. This is 8.7% higher than a year ago. eBay also reported better-than-expected earnings and revenue thanks to its Skype telephone and PayPal payments divisions.

The daily bias still remains bearish as a result of the price resistance from several months back and the slowing upside pace on the 60 minute and daily time frames. The odds are high that we will start to see more of a price correction over the next week or two. The rounded highs are not creating as favorable of a reversal pattern as they would have had they risen more sharply into the daily resistance and then rolled over instead of only rallying halfway and then slowing down, but it's still strong enough to make be extremely cautious on the long side for anything other than short-term daytrades or stocks moving outside the bias of the overall market.

Market Holds, but Bias Remains Weak

Market Holds, but Bias Remains Weak

(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 ($DJI) rose 127.83 points, or 1.6%, at 7,969.56 on Tuesday. All but 5 of the Dow's 30 index components closed in positive territory. They were led by Citigroup (C) with a gain of 10.20%, followed by a 9.57% gain in JP Morgan Chase (JPM). Bank of America (BAC) came in third with a gain of 9.23%. Merck (MRK) led the losers with a loss of 6.66%, followed by a 2.80% decline in Coca Cola (KO). The S&P 500 ($SPX) rose 17.69 points, or 2.1%, and closed at 850.08 on Tuesday. Crude oil futures rose from $45.88 on Monday to $46.51 on Tuesday. The Nasdaq Composite ($COMPX) rose 35.64 points, or 2.2%, and it closed at 1,643.85.

Dow Jones Industrial Average ($DJI)


After a steady day of selling on Monday, the market slowed into the close and the prices changed very little from the prior day's close. The indices gapped down slightly, but immediately began to pull higher out of the opening bell and very quickly closed the opening gap. The Nasdaq had the strongest gains and continued to rally even once the gap closed, but the S&Ps and Dow stalled when they hit their 5 minute 20 period simple moving averages within 15 minutes of the opening bell.

At 10:00 ET the indices began to correct off early morning highs. The pace was much slower than the rally and the extended downside from the previous session kept the bears at bay on Tuesday. The S&Ps and Dow hugged the 5 minute 20 sma to create a 5 minute Phoenix™ while the stronger Nasdaq fell into support at its 5 and 15 minute 20 sma support. At that point he market took off once again with the strongest action of the day for the S&Ps and Dow. The Nasdaq was a little bit weaker this time around as a result of its stronger opening action, but it still made it to back to the morning highs very easily.

S&P 500 ($SPX)


This market paced slowed mid-day on Tuesday. The 15 minute 200 period sma held in the Nasdaq, while the S&Ps and Dow held price resistance. When the 13:00 ET correction period hit the market turned and began to pull lower, but the pace of the selling was gradual. The slower downside created a buying opportunity when the upper channel of the correction broke higher out of 14:30 ET. This move easily took the indices back into the mid-day highs and beyond and the market close just off intraday highs.

Nasdaq Composite ($COMPX)


At this point the Dow and S&Ps are forming bearish daily charts, but overall action in the indices is suggestive of a longer trading channel. As result, I don't have much on my watch list for swingtrades and will continue to focus upon the shorter time frames until a stronger reversal pattern triggers on a 60 minute time frame to confirm the attempted correction on the daily charts.

Market Turns Sharply as Earnings Disappoint in BAC

Market Turns Sharply as Earnings Disappoint in BAC

(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 258.86 points, or %, at 7,872.47 on Monday. This was the Dow's largest point loss since March 2. Every single one of the Dow's 30 index components posted a loss. The decliners were led by a 24.34% drop in Bank of America (BAC). Even though it posted gains for the first quarter, it showed little recovery in most of its departments. Citigroup (C) also fell sharply, down 19.45%, followed by American Express (AXP) with a loss of 12.98%. IBM posted the smallest loss of 0.83%, followed by a 0.88% loss in Kraft (KFT).

The S&P 500 ($SPX) fell 37.21 points, or 4.3%, and closed at 832.39 on Monday. This was the S&P's largest point loss since February. The financial sector faced the steepest losses. The Select Sector SPDR-Financial (XLF), which tracks the S&P financials, was down 11.2%. Energy shares were also substantially lower. Crude oil futures fell from $50.33 to $45.99 a barrel.

The Nasdaq Composite ($COMPX) fell 64.86 points, or 3.9%, and it closed at 1,608.21. This was the Nasdaq's largest point loss since last October. The big news in the Nasdaq on Monday was the announcement that Oracle (ORCL) intends on purchasing Sun Microsystems (JAVA) after talks broke down between JAVA and IBM. JAVA shares rose 36.8%, which ORCL fell 1.3%.

Dow Jones Industrial Average ($DJI)


The index futures based after pulling sharply off Friday's intraday highs during all sessions trade on Sunday with a bearish bias. Despite a minor attempt to break lower, the larger base held into the early morning hours on Monday. Then, at 4:00 am ET, the bottom dropped out. The index futures began to sell off and sell off quickly. The downside continued into the 6:00 am ET correction period. At that point support from Friday's lows hit in the ES (S&Ps) and the market fell into another period of congestion. This congestion broke sharply lower once again just a few minutes past the opening bell.

At 10:00 ET the Conference Board announced a decline of 0.3% in March in its leading economic indicators index. Although it revised the decline in February higher by 0.2%, economists had expected it to remain unchanged and the market was not comforted by the news.

S&P 500 ($SPX)


This opening selloff was stronger than any seen in the premarket and it took less than 90 minutes for the market to fall as much as it had in the all sessions trading since Friday's close. Support hit onces again at the 11:00 ET correction period and held, but the pace of the selloff kept the buyers from eagerly jumping on board. The 5 minute 20 sma held as resistance and the market congested into mid-day. This range attempted to break lower out of the 13:00 ET correction period, but only the S&Ps and Dow managed new intraday lows. The Nasdaq continued to base tightly along its 11:00 ET lows until running into its 15 minute 20 period simple moving average. This was strong resistance and pushed the index lower. The S&Ps and Dow continued to hold the 5 minute 20 sma as resistance throughout most of the session. The extreme amount of selling early in the day kept the market from being able to push strongly lower in the afternoon, but the indices still closed near the day's lows after stabilizing in the final hour of trade.

Nasdaq Composite ($COMPX)


When the market wrapped up last week, the indices were shifting pace on the upside and creating a momentum reversal pattern on the 60 minute and daily time frames. It left room for another push up before triggering, but in the end the pattern triggered without this additional shift. The concern over earnings was enough to trigger the pattern before the market had even opened on Monday. Another test would have been more ideal for a stronger multi-day correction to allow the 20 day simple moving averages to break the most easily, but the pattern is still quite strong on the Dow and is still likely to break and continue lower this week anyway. Watch for a base on a 60 minute time frame for a continuation pattern to form. A congestion such as that would create another opportunity for a stronger breakdown. The Nasdaq will have the most difficult time sustaining stronger selling.

Dow Posts 6th Straight Week of Gains

(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) closed higher by 5.90 points, or 0.1%, at 8,131.33 on Friday. The best performers were American Express (AXP) (+5.41%), McDonald's (MCD) (+2.54%), and Bank of America (BAC) (+2.51%). The top losers were Citigroup (C) (-8.98%), General Motors (GM) (-4.12%), and Microsoft (MSFT) (-2.83%). For the week as a whole the Dow rose 0.6%. Even though it was a small move off the previous Friday's close, it brought the winning streak up to a total of 6 weeks of gains. This is its largest 6-week gain since 1938. It is up 24% since hitting lows early last month, although it is still down 7.4% on the year-to-date.

The S&P 500 ($SPX) rose 4.30 points, or 0.5%, and closed at 869.60 for a weekly gain of 1.5%. Consumer discretionary shares led the gainers, while telecommunication services had the most difficult time among the S&P industry groups. The S&Ps are down 3.7% on the year-to-date after recovering from a loss of over 25%. Crude oil futures closed at $50.33 a barrel on Friday.

The Nasdaq Composite ($COMPX) rose 2.63 points, or 0.2%, and it closed at 1,673.07. The Nasdaq finished the week higher by 1.2%. For the year-to-date the Nasdaq is now up 6.1%. It had been down 19.6% at the year's lows.

Dow Jones Industrial Average ($DJI)


The end results on Friday reflect a difficult trading session. Volume was once again on the lighter side and the action intraday was very choppy. The overall range was also smaller than most of the recent sessions, but close to those of earlier highs within the recent rally where it has tested the upper channel resistance. As a result, the bias heading into the closing bell was bearish and the futures markets followed through on this bias into Sunday's session. The 60 minute charts have hit equal move resistance as compared to the rally during the second week of this month, but with two highs now in place on this current push higher over the past several days, there remains a chance at a third test before the market pulls too much lower. After that, however, the odds are very high for a stronger price correction on the daily time frame. The market might try this right away, but another test at highs would allow a reversal to have more security in its follow-through.

S&P 500 ($SPX)


Even though the action was sloppy on Friday, support and resistance levels and general pattern formations still held. The early morning bias was a continuation of Thursday's late day reversal and the market continued lower out of a sloppy 5-`5 minute Avalanche™ early in the session. The second wave of this pullback held lows into the 10:45 ET correction period, creating a 2B reversal in the Nasdaq off price support from Thursday's mid-day congestion and morning highs. The S&Ps and Dow also hit very strong price support with the 20 period simple moving averages on the 15 minute time frames. Since corrective moves within bull flags often form with two waves of correction, this led to a strong bull flag on that time frame coming out of the morning trade. It confirmed with a 5 minute Phoenix™ when the indices hugged the 5 minute 20 sma on lighter volume before breaking higher.

Nasdaq Composite ($COMPX)


The afternoon ascent was a difficult one because the market didn't form pretty continuation patterns on the upside. Even though the 15 minute bias supported at least a retest of the highs, the markets tried to roll over off the noon highs. The market did eventually continue the upside rally, but the trigger just prior to 13:00 was not clear-cut and very easy to miss. The market attempted to turn back around out of the 14:00 ET correction period when the Nasdaq and Dow retested Thursday's highs, but the indices pushed higher again into 14:30 ET before they turned. This was done off a slightly higher high in the Dow and Nasdaq. The pace shifted rapidly off highs before the market congested into the close in the final hour of trade. This set the market up for that Sunday drop in the index futures.

Be sure to keep an eye on earnings this week. They kick in full force and will serve to lead the market over the next several weeks. Just a few of the names to watch for this week will be Apple (AAPL), Microsoft (MSFT), Yahoo (YHOO), and Wells Fargo (WFC).

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, April 20, 2009
10:00 a.m. Mar Conference Board Leading Indicators: Expected: -0.1%. Previous: -0.4%.

Tuesday, April 21, 2009
7:45 a.m. ICSC Chain Store Sales Index For Apr 18: Previous: +0.8%.
8:55 a.m. Redbook Retail Sales Index For Apr 18: Previous: +0.9%.
4:30 p.m. Apr 17 API Oil Industry Report For Apr 17
5:00 p.m. ABC/Wash Post Consumer Conf For Apr 18: Previous: -51.

Wednesday, April 22, 2009
7:00 a.m. Mortgage Application Refinance Index: Previous: -10.9%.
10:30 a.m. U.S. Energy Dept Oil Inventories For Apr 17

Thursday, April 23, 2009
8:30 a.m. Initial Jobless Claims For Apr 18 Week: Expected: +33K. Previous: -53K.
10:00 a.m. DJ-BTMU Business Barometer For Apr 18: Previous: +0.7%.
10:00 a.m. Mar Existing Home Sales: Previous: -5.1%.
10:30 a.m. EIA Natural Gas Inventories

Friday, April 24, 2009
8:30 a.m. Mar Durable Goods Orders: Previous: +3.4%.
10:00 a.m. Mar New Home Sales: Previous: +4.7%.



Key Earnings Announcements This Week:

Monday, April 13, 2009
Before: ALGT, BAC, BOH (?), ETN, LLY, HAL, HAS, MMR, SXT, TNB, WFT
During: -
After: \BMI, BXS, BSX, BRO, CNI, CHINA, CR, ELS, FWRD, HWAY, IBM, IEX, JDAS, MNCR, MLNX, NARA, OMCL (?), OMI, PKG, PNFP, RLI, SGK (?), SYK, TXN, VLTR, ZION

Tuesday, April 14, 2009
Before: AKS, AME, ARB, ASTE, ALV, BK, BJS, BLK, EAT, CSL, CAT, COH, KO, CNB (?), CMA, DAL, DD, FCFS (?), FRX, HBAN, IIVI, JEF, JCI, KEY, KCI, LAB, LXK, LMT, MTB, MAN, MRK, MICC, EDU, NYT, NTRS, NVR (?), PNR, PTEC (?), BPOP (?), DGX, RF, ROH (?), SGP, STT, TASR (?), AMTD, TRA, UAUA, UTX, UNH, USB, USG, WBS, WU
During: -
After: AMD, ALTR, AMP, BRCM, CHRW, COF, CENX, CPTS, CVTI (?), CREE, CBST, CYMI, FULT, GILD, HBHC, HGIC, HCBK, IBKC, ILMN, INFN, MANH, MRTN, MOLX (?), NBR, NSC, PPDI, RCRC, SNDK, STX, SFG, TEX, TUP, VNUS (?), VOCS (?), WCN, WSII, WMS, YHOO

Wednesday, April 15, 2009
Before: APD, AAI, ATI, MO, ABFS, T, ATMI, BA, CHE, CAL, CFR (?), DOV, ELN, ECA, FCX, GNTX, IGTE, IMN, IR, JAKK (?), JRN, KNSY, KMB, NITE, LII, MCD (?), MKSI, MS, NOC, PBG, PFCB, PDS, PFS, RIMG, R, SNA, STJ, SY, SNV, TDY, TIN, WLP, WFC, WIT, WWW
During: EGN, SUSQ
After: AATI, AFFX, ACL, ADS, AB, DOX, AAPL, ASIA, AF, AXYS, BCR, CMG, CNH, CNS, COHR (?), CLB, EXBD (?), CSGP, CVA, DAC (?), EBAY (?), WIRE, EPIQ, EFX, EQIX, FFIV, FIC, DAVE, FR (?), FMC (?), GGG, HUBG, ISIL, IRBT, KEX (?), KNX, LRCX, LHO, LEG, LOGI, MTSC, NTGR, NFX, NE, NVLS, NUVA, PTV, PTP, QCOM, QDEL, RJF (?), RHI, RUSHA, SEIC (?), SKX (?), SLM, STLD, TMK, TSCO, TQNT, TBI, WOOF, VTNC, VMW, WGOV, XLNX, YUM

Thursday, April 16, 2009
Before: AMG (?), ALK, ALXN, AMAG (?), AIT, AUO (?), AN, AVT, AVX, BLL, BDC (?), BHE, BDK, BG, CCMP, CP, CSH, CLS, CRDN (?), CIT, CME, CXG, CNMD, COP, CNX, CBE, CVTX (?), DHR, DLX, DO, DHX, DDE (?), DVD (?), EMC, EMCI, ESV, EXC (?), FITB, FCF, F (?), FELE, GMT, GR, GRC (?), HSC, HHS (?), HGRD, HSY, HNI, HUB.B, RX, IDC, IGT, IVC, IMA (?), IVZ, ESI, JNS, KBW (?), KVHI, FSTR, LLL, LH (?), LTM, LYTS, MAR, MI, MEA (?), MTG (?), NAFC (?), NOV, NCR, NIHD, NWPX (?), NCX, NVS (?), NUE, OXY, ODFL, ORI, OMTR, PENN, PEP, PM, PNC, POT (?), QUIX (?), RSH, RTN, RGC (?), RS, RCL, SCG, POOL, SHPGY (?), SIAL, SPNC (?), SU, STI, SVU, SYNT (?), TCB, SNAK, TMO, TRAD, UNP, UPS, LCC, VDSI, VIP (?), WAB (?), WSO (?), WCC (?), WYNY, ZMH, ZOLL (?)
During: -
After: AEA (?), AEIS, ALGN, AMZN, AXP, AFG (?), ACF, AMGN, AMSG, ATHR, AVID, AVCT, BJRI, EPAY (?), BUCY, BLDR, BNI, CPHD, CF, CHRT (?), CAKE, CB, CRBC, CYN, COHU, COLM, CYH, RIO (?), CNW, CCI (?), CYBS, CYBI (?), DDUP, DECK, DFG, DDR, DV, DGII, EMN, ELX (?), ETH (?), EXTR, EXPW, FII, GDI, GNW (?), HLIT (?), HITT, INFA, INSU, IBKR, XXIA, JJSF, JNPR, KLAC, LRCD (?), LSCC, WFR, MCRL (?), MSCC, MSFT, MTX, MHK, MCRI (?), NCI (?), NFLX, NTRI (?), OPLK, PKI (?), PXLW (?), POWI, PGI, RMBS, RRC (?), RJET (?), RVBD, ROP (?), RRR (?), RBCN (?), SCSC, SBCF (?), SIMG, SIRF, SWKS, STMP, STAR, STSA, SPWRA, SYNA, TTGT (?), VIGN (?), WDC, YRCW

Friday, April 17, 2009
Before: MMM, ACO, AEP, ACI, HON, IDXX, ITT, KMT, LNCE, MBFI (?), MV, SAIA, SLB, SWK, TROW, WL, XRX
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.

Indices Hold Highs

Good day! The Dow Jones Industrial Average ($DJI) closed higher by 95.81 points, or 1.2%, at 8,125.43 on Thursday. Merck (MRK) was the top loser, but it only fell 1.52%. Hewlett-Packard (HPQ) led the gainers with a rally of 5.02%, followed by Microsoft with a gain of 4.94%. HPQ reported that first-quarter profits fell 10%, but it still beat estimates. The S&P 500 ($SPX) rose 13.24 points, or 1.6%, and closed at 865.30. The Nasdaq Composite ($COMPX) rose 43.64 points, or 2.7%, and it closed at 1,670.44.

Dow Jones Industrial Average ($DJI)


The pace of the market's action in recent days has caused a lot of speculation as to whether or not the highs set for the month ahead of Thursday's opening bell would hold. Even though the market's buying had slowed and volume dropped off the earlier slowing pace from several weeks ago would not allow me to rule out another test of the highs. When I was wrapping up yesterday's column at 4:00 am ET, the index futures were just coming off support at that correction period. The momentum held steady and formed a cup-with-handle into the 6:00 am ET correction period. The "V" type of bottom at the lows of the cup meant strong favor for a trading range on the 15 minute time frame into Thursday morning. The index futures popped higher at 8:00 am ET and this move took the Dow futures into the upper end of that range and into very strong price resistance from the prior day's afterhours highs.

The Nasdaq was a lot stronger than the Dow coming out of 8:00 am ET. It easily broke through the prior day's highs. When the Dow corrected off its premarket highs it fell all the way back to the lower end of the 15 minute range from the overnight trade, but the stronger Nasdaq only pulled back to its 15 minute 20 period simple moving average on the all-sessions time frame. In both of these two indices this support came at the 5 minute 200 sma support and the 10:45 ET correction period.

S&P 500 ($SPX)


Corrective moves with a trend often form with two waves of pullback before the larger bias continues. This is what took place intraday in the Dow on Wednesday afternoon that led to the late day rally and it is also the action that formed into Thursday morning on the 5 and 15 minute time frames. The scale of the correction was the same as the previous day and this helped support a bullish bias into mid-day on Thursday. The pace of Thursday morning's correction, however, was stronger than on Wednesday. This made it more difficult to mount as strong of a rally coming off the 10:45 ET support. Instead of creating a bull flag, the action was another "V' bottom.

Nasdaq Composite ($COMPX)


As on Wednesday, the 13:00 ET correction period held very well. This corresponded to the zone of the prior 15 minute highs. The Dow gave back just over half its gains before finding support again, but the smaller two-wave pullback off the 13:00 ET highs was followed by another very strong turn higher. By 15:00 ET the indices had struck 15 minute equal move resistance. The pace slowed, but the market still managed to creep slightly higher before finally pulling back somewhat in the final 30 minutes of trade off the larger 15 minute resistance zone. The correction off the late day resistance continued in afterhours trade, leaving the all-sessions high made at the end of the day a potential third high on that time frame once again in the Nasdaq futures. This pattern, along with a change in pace on the all-sessions chart of the Dow, suggest that things are still dicey for the bulls, even though we don't have any reversal confirmation to trigger a larger correction on the daily chart yet.

Indices Continue to Hold Monthly Highs on Light Volume

Good day! The market was very mixed on Wednesday. Technology shares were weak and held down the Nasdaq, keeping it in negative territory throughout nearly the entire session. The Nasdaq Composite ($COMPX) only managed to gain 1.08 points, or 0.1%, and it closed at 1,626.80. Intel (INTC) fell 2.44% after its earnings came in better-than-expected, but the company refused to offer guidance for the remainder of the year. MSFT, AAPL, and DELL all experienced weakness throughout the day. INTC and MSFT were the top Dow losers.

The Dow Jones Industrial Average ($DJI), however, closed higher by 109.44 points, or 1.4%, at 8,029.62 on Wednesday. All but 5 of the Dow's 30 index components closed in positive territory. American Express (AXP) rose 11.88% and led the gainers. It was followed by a 6.18% gain in General Motors (GM) and a 6.06% gain in JP Morgan Chase (JPM).

The S&P 500 ($SPX) rose 10.56 points, or 1.3%, and closed at 852.06. The homebuilders, financials, and industrial companies led the intraday recoveries. Energy shares were lower with news from the Energy Department that crude oil inventories were up 5.6 million barrels last week. This was greater-than-expected and crude oil futures fell 16 cents a barrel to $49.25 a barrel in New York. Peabody Energy (BTU) was the largest decliner amongst the energy stocks. It fell 11.5%.

Dow Jones Industrial Average ($DJI)


Wednesday's session began with a gap lower in the indices. The Labor Department announced in the premarket that the Consumer Price Index fell 0.1% in March after a 0.4% rise in February. This was in line with expectations. The CPI is down 0.4% year-over-year. This is the first annual decline since August 1955, but falling energy prices contributed a great deal to this drop.

The market was split out of the open. The Nasdaq continued to creep lower in the first 30 minutes of the day, but the S&P 500 and Dow Jones Ind. Ave. held their 5 minute lows and then turned higher to close the gap within its first 30 minutes of the day. The upside continued out of 10:00 ET when the Nasdaq also joined in. Both the S&Ps and Dow returned to the prior afternoon's highs which served as strong price resistance. This hit at the same time as the Nasdaq's 5 minute 20 simple moving average resistance and the 10:15 ET correction period in the overall market. The market started to correct slowly off these intraday highs and then gained momentum into mid-day.

S&P 500 ($SPX)


The mid-morning reversal took the indices lower for the next hour. The Dow held up the best, but the Nasdaq fell to new intraday highs and lower channel support on the 15 minute time frame. This lower channel level also held on the Dow and hit at the same point as the 11:15 ET correction period. This is the final correction period of the morning. The market had a difficult time turning back higher after hitting this low. This was likely due to the pace of the selloff on the 15 minute time frame. Instead the indices crept higher throughout mid-day before hitting resistance at the 13:00 ET correction period when the NAHB housing index data came out. This resistance held and the market gained momentum on the downside into 15 minute support at the 15:00 ET correction period. At this point a slower momentum move on the 2 minute selloff shifted the pace of the selling and the market turned sharply higher. This rally stalled briefly around 15:30 ET, but then pushed sharply higher once again into the closing bell.

Nasdaq Composite ($COMPX)


Although the market spiked into the close, and even pushed further afterhours, by 4:00 am ET on Thursday the Nasdaq futures were back at price support from Tuesday's lows and the S&Ps were back to mid-range support from Wednesday. This is a good support zone, but it's still going to remain more difficult for the markets to push much higher on a daily time frame without a larger daily correction off highs. The pace has still not shifted enough, however, to allow for any strong breakdown just yet.

Indices Continue to Hold Resistance at 3rd Test of Highs

Good day! The Dow Jones Industrial Average ($DJI) closed lower by 137.63 points, or 1.7%, at 7920.18 on Tuesday. Only 4 of the Dow's 30 index components closed in positive territory. The gains were made in Citigroup (C) (+5.53%), General Motors (GM) (+4.09%), Johnson & Johnson (JNJ) (+0.43%), and Intel (INTC) (+0.19%). American Express (AXP) (-9.92%) led the losers, followed by JP Morgan Chase (JPM) (-8.90%), and Bank of America (BAC) (-8.44%). JP Morgan has earnings due out on Thursday, followed by Citigroup on Friday.

The S&P 500 ($SPX) fell 17.23 points, or 2.0%, and closed at 841.50. Despite strong earnings results, Goldman Sachs (GS) fell 11.6% on Tuesday and financials across the board were amongst the biggest losers in the S&P as well as the Dow. Crude oil futures fell 1.3% to $49.41 a barrel in New York. This dragged down energy shares as well. Gas prices this summer are expected to average $2.23 per gallon this summer with demand remaining weak. Last summer prices averaged $3.81 per gallon.

The Nasdaq Composite ($COMPX) lost 27.59 point, or 1.7%, and closed at 1,625.72. Intel (INTC) reported earnings and beat estimates with a profit of 11 cents a share as compared to an expected gain of 3 cents a share. It's net income, however, was 55% lower than a year ago.

In other news on Tuesday, the Commerce Department reported that retail sales fell 1.1% in March. Economists had been expecting an increase of 0.2%. This result puts retail sales down 9.4% from a year ago. The Labor Department also reported that the Producer Price Index declined 1.2% in March. Energy prices fell 5.5% last month, while food prices were down 0.7%. The PPI is now down 3.5% from one year ago. This is the largest annual decline since 1950. Both fed chief Bernanke and President Obama spoke as well on Tuesday and expressed signs that the economy is beginning to stabilize, although neither expressed views of a strong recovery yet at this juncture.

Dow Jones Industrial Average ($DJI)


Even though the index futures were trading strongly higher and testing the zone of Monday highs into 8:30 am ET after steady selling from Monday's close into 3:00 am ET on Tuesday, the 8:30 am ET data rapidly wiped out that recovery. The reversal was the sharpest in the S&Ps and Dow and both continued lower out of the opening bell, although the Nasdaq found support almost immediately at Monday's lows. The Dow broke through those previous lows, but both it and the S&Ps hit and held strong support within 15-20 minutes of the open. In the Dow this support was the most visible at the 15 minute 200 period simple moving average, while the 5 minute 200 sma served as support in the S&Ps, along with its own lows from Monday.

When the 10:15 ET correction period hit, the markets gained pace on the upside. The gaps quickly closed in the Nasdaq and S&Ps, although the Dow didn't quite manage to do so. This gap resistance hit at the same time as the 10:45 ET correction period and the markets again began to turn lower. The reversal was slow at first, but picked up once the 5 minute 20 sma support broke soon after 11:00 ET.

The market hit support once again at about 11:30 ET. The three indices were primed for a congestion period and continuation pattern, but they broke more quickly in the S&Ps and Dow out of noon. The Nasdaq formed the longer base into the 5 minute 20 sma at 12:30 ET on light volume before it also broke lower. This early afternoon selloff took the Dow back to support at last Wednesday's highs in the Dow.

S&P 500 ($SPX)


Even though the market fell sharply at 12:30 ET, a fact that typically prevents it from recovering easily, the pace shifted slightly into 13:00 ET and the markets pulled up into the 5 minute 20 sma to formed a 5 minute Phoenix™ similar to the one that took place mid-day on Monday. The indices hugged the 5 minute 20 sma and triggered the buy setup coming out of the 14:00 ET correction period. The weaker placement of the market within the larger trend prevented the indices from gaining momentum like they did the previous day, however, and mid-day resistance held into 14:30 ET on choppy trade. A sloppy 5 minute bull flag triggered when Bernanke began to speak, but the move merely took the indices back into stronger mid-day resistance and lasted only several minutes. The afternoon remained choppy into the close, pulling back off the afternoon highs.

Nasdaq Composite ($COMPX)


As we look at the daily and 60 minute charts of the indices, it's easy to see three distinct highs made since March 27th. The second and third highs are both only slightly higher than the first and this creates a momentum shift on those time frames. Such a shift is ideal for reversal patterns off the third highs.

My only concern is that the pace also shifted slightly with three more tightly spaced highs into the one on the 27th. In this regard, the momentum shift is not as great as it would have been had it not made that attempt already. This can create added risk for more of a trading range and then a fourth attempted high before a larger daily correction off highs takes place. Nevertheless, the volume has been dropping, which shows less and less participation at each new high.

I am more keen to play setups for longer holds on the short side, but will see how the indices manage the lower end of the current daily and 60 minute trend channel before initiating many swingtrades. The 20 day sma is strong support for this trend, but a break in that level can easily lead to a multi-week correction off this daily resistance zone. A base or congestion move along the lower trend channel line will help secure stronger follow-through on a breakdown. It would take several days, however, for such a base to form.

Market Creeps into New Week of Trade

Market Creeps into New Week of Trade

(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 didn't accomplish much from a daily perspective on Monday. The Dow Jones Industrial Average ($DJI) closed slightly lower by 25.57 points, or 0.3%, and closed at 8,057.81. The S&P 500 ($SPX) rose 2.17 points, or 0.3%, and closed at 858.73. The Nasdaq Composite ($COMPX) rose 0.77 point, or 0.1%, and closed at 1,653.31.

The dismal news in the Dow came from General Motors (GM), which closed lower by 16.3% at $1.71/share following a New York Times report that GM had until June 1 to file for bankruptcy if it cannot secure bondholders or a union restructuring plan. Bank of American (BAC), on the other hand, performed well with the other financials and rose 15% on Monday. JP Morgan (JPM) reports earnings on Tuesday, while Citigroup (C) follows on Friday, so the financials will remain at the forefront of news throughout the week. Goldman Sachs (GS) has already reported a second-quarter profit of $3.39/share. This beat the street's estimates, although the market took the gains without much "hoorah".

Dow Jones Industrial Average ($DJI)


The indices opened lower into Monday morning following a gradual ascent throughout approximately the final 2/3 of the session on Thursday. The market remained weak in the first half hour of the day, but the pace of the selling at that time was extremely gradual. On the 5 minute charts the overlap from one bar to the next was extreme. This change in pace compared to the gap itself allowed the indices to attempt a more rapid reversal at 10:00 ET. The 5 and 15 minute 20 period simple moving averages hit as resistance at about 10:15 ET.

Another wave of selling followed intraday into the 11:00 ET correction period. Although it was faster than the opening action, it was still slower than the rally and this led to a very slightly lower low to create a 2B trap in the Dow Jones Ind. Ave. The S&P 500 held up even better and found support at the breakaway zone from the earlier move at 10:00 ET. The S&Ps hugged the 5 minute 20 sma at this time and this would help contribute to the action that followed. The Nasdaq Composite was much weaker than the rest of the market. It fell easier to new intraday lows out of 10:45 ET, but held support at 11:00 ET as well.

S&P 500 ($SPX)


The market again held the 5 minute 20 sma as resistance when the indices bounced in the latter half of the morning. Instead of falling off that level this second time around, all three of the indices hugged that resistance level. The lighter volume within the congestion at resistance, slower pace of the move along the sma, support levels, correction period, and trend placement all worked to create a Phoenix™ buy setup out of 12:00 ET.

Since the larger momentum remained very weak on a 15 minute time frame, the markets once again had a very difficult time getting started. The 13:00 ET correction period stalled a sloppy ascent into the early afternoon, followed by a slightly stronger one out of the 14:00 ET correction period. Neither offered any setup past rapid scalps, but at 15:00 ET the market received a boost. The indices broke higher out of a 2-wave pullback on the 5 minute time frame. The 15 minute 20 sma served as support and the 15:00 ET correction period also held. This time the correction period hit whilst the market was at support and this created some rapid upside moves into the final hour of trade. The pace shifted yet again into the end of the session and the Dow gave up its intraday gains in the final 30 minutes of trade.

Nasdaq Composite ($COMPX)


The market action on Monday was very similar to Thursday's action. The pace on the upside was much stronger, however, and it leaves the indices open for a two-wave upside continuation move on the all sessions time frames into Tuesday. The index futures held lows after a final flush into the 2:00 am ET correction period Tuesday morning. Prices moved higher, but failed to do so at a stronger-than-average pace. This leaves it vulnerable for another breakdown into Tuesday morning. My larger daily outlook remains the same and is dependent upon the direction the trend channel from the past two weeks breaks. A further change in momentum at this resistance that leads to rounded highs on the 60 minute time frame will create favor for a larger daily pullback, but we are not experiencing this yet.


Yesterday's Column:
http://www.tradingfrommainstreet.com/newsletters/FocusLetter/archives/20090413.html

Market Holds Range Heading into Final Day of Shortened Week

(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 surged on Thursday on a positive projection of a $3 billion profit from Wells Fargo & Co. (WFC) for the first quarter of this year. WFC alone gained 31.7%. This week will be a big one for the banking sector with earnings also due out in J.P. Morgan Chase (JPM) and Citigroup (C). JPM rose 19.39% on Thursday, while C rose 12.59%. American Express (AXP) climbed 19.78%. Thursday's gains marked quite a turn-around from earlier in the week when one analyst's report stating the expectation of Great Depression-era bank loan losses spread like wild fire.

Dow Jones Industrial Average ($DJI)


The Dow Jones Industrial Average ($DJI) rose 246.27 points, or 3.1%, and closed at 8,083.38 on Thursday. It ended the shortened trading week higher by 0.8% for the 5th straight week of gains with the financials leading Friday's gains. The last time the Dow managed a 5-week upside run was in October 2007 when it hit its all-time high.

The S&P 500 ($SPX) rose 31.40 points, or 3.8%, and closed at 856.56. The S&Ps rose 1.7% for the week. This was the best 5-week percentage gain in the S&Ps in 16 years. Energy shares rose on Thursday along with crude oil futures, which closed higher by 5.8% at $54.24 a barrel in New York.

The Nasdaq Composite ($COMPX) rose 61.88 points, or 3.9%, and closed at 1,652.54. The Nasdaq finished the week higher by 1.9%.

S&P 500 ($SPX)


The market took off stronger within 15 minute of the opening bell on Thursday to continue the morning rally. Despite correcting back into that breakout zone in the latter half of the morning, the pace was gradual enough to hold onto the support and pull higher to congest mid-day. The gap and earlier rally, however, left little room for continued upside without allowing the market to catch its breath. Even though it pushed higher, the moves were choppy for the most part. The Nasdaq, which had led the morning ascent, took a backseat to the Dow and S&Ps in the second half of the session. All three indices went into the closing bell at or near the day's highs.

Nasdaq Composite ($COMPX)


The lack of momentum shift into Wednesday's close had left the market open for another push higher on the daily charts and Thursday's news from WFC cinched the deal. The gap triggered a third push higher on that time frame at this level of daily resistance. At this point the market is creating a potential momentum reversal pattern on the daily time frame with this third push into a slightly higher high after the larger rally a month ago. Even though last week's lighter volume can be attributed in part to the holiday trading week, it also supports this pattern formation.

If the market does manage to break through the upper trend channel made by the previous two highs by more than a hair, however, the next major resistance level in the Dow and S&Ps is not until the price zone from the beginning of this year. At this point I I am a bit leery in both directions on the daily time frame, since pace into the weekend suggests the attempt to break the daily channel highs, but I've also see this pattern create a trap quite often and reverse or correct longer before continuing. I think a lot is going to hinge upon whether or not the other financials do as well as WFC. If they don't, then we can see another large daily pullback take place very shortly.

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, April 13, 2009
No major economic indicators scheduled.

Tuesday, April 14, 2009
7:45 a.m. ICSC Chain Store Sales Index For Apr 11: Previous: +0.6%.
8:30 a.m. Mar Producer Price Index: Expected: -0.1%. Previous: +0.1%.
8:30 a.m. Mar Producer Price Index, ex-food & energy: Expected: +0.1%. Previous: +0.2%.
8:30 a.m. Mar Retail Sales: Expected: +0.2%. Previous: -0.1%.
8:30 a.m. Mar Retail Sales, ex-autos: Expected: 0.0%. Previous: +0.7%.
8:55 a.m. Redbook Retail Sales Index For Apr 11: Previous: +0.4%.
10:00 a.m. Feb Business Inventories: Expected: -1.2%. Previous: -1.1%.
4:30 p.m. API Oil Industry Report For April 10
5:00 p.m. ABC/Wash Post Consumer Conf For Apr 11: Previous: -50.

Wednesday, April 15, 2009
7:00 a.m. Mortgage Application Refinance Index: Previous: +3.2%.
8:30 a.m. Mar Consumer Price Index: Expected: -0.1%. Previous: +0.4%.
8:30 a.m. Mar Consumer Price Index, ex-food energy: Expected: +0.1%. Previous: +0.2%.
8:30 a.m. Apr Empire State Fed Manufacturing Survey: Expected: -35.5. Previous: -38.23.
9:00 a.m. Feb Tsy International Capital: Previous: -$60.9B.
9:15 a.m. Mar Industrial Production: Expected: -0.9%. Previous: -1.5%.
9:15 a.m. Mar Capacity Utilization: Expected: 69.6%. Previous: 70.2%.
10:30 a.m. U.S. Energy Dept Oil Inventories For Apr 10
1:00 p.m. Apr NAHB Housing Index: Previous: 9.
2:00 p.m. Federal Reserve Beige Book

Thursday, April 16, 2009
8:30 a.m. Initial Jobless Claims For Apr 11 Week: Expected: +6K. Previous: -20K.
8:30 a.m. Mar Housing Starts: Expected: -7.4%. Previous: +22.2%.
10:00 a.m. Apr Philadelphia Fed Business Index: Expected: -32.3. Previous: -35.
10:00 a.m. DJ-BTMU Business Barometer For Apr 4: Previous: -0.4%.

Friday, April 17, 2009
10:00 a.m. Mid-Apr Reuters/U Mich Sentiment Index: Expected: 57.5. Previous: 56.6.



Key Earnings Announcements This Week:

Monday, April 13, 2009
Before: -
During: -
After: CHINA (?), JBHT (?), RNOW (?), SGK (?), TLB

Tuesday, April 14, 2009
Before: CBSH (?), FAST, GS, JNJ, GWW (?)
During: -
After: ADTN, ALJ (?), CSX, HCSG (?), INTC

Wednesday, April 15, 2009
Before: ABT, ACGY, ASML (?), SCHW (?), INFY, LUFK, MTOX, BTU, PJC, PGR
During: -
After: ATR, CCK, DTLK, KMP (?), LSTR, LLTC (?), PLCM, STX (?), STLY, UFPI

Thursday, April 16, 2009
Before: AMFI (?), APH, ASPM (?), BAX, BLK (?), BGG, CY, FCS, GCI,GPC, HOG, ITW, RX (?), IIIN, JPM, KNL, VIVO (?), MTG (?), NOK, NVR (?), ORB (?), PH, PII, SHW, SON, LUV, TITN, UTEK, UMPQ, VIP (?), WSO (?)
During: ASBC, PPG
After: BIIB, CHP (?), CHIC, CYT, GOOG, ICUI, ISRG, PBCT, PGI (?), RLRN, RUSHA (?), SNDK, TK (?), TPX, USAK, VASC, VRTX, WERN (?)

Friday, April 17, 2009
Before: AOS, BBT, C, FHN, GE, IGTE (?), MAT, MEG, OSTK (?), PRSP
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 Holds Range Heading into Final Day of Shortened Week

(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 action on Wednesday remained choppy as I cautioned throughout the first half of the week. The indices gapped higher after pullback back into Tuesday's close, but they were not able to hold onto those gains very easily. The rally out of the gap lasted until about the 9:45 ET correction period and then ran into strong resistance from Tuesday's highs. The rally faltered and then turned quickly. The gap zone closed by 10:30 ET. Support from the closure of the gap, as well as the 15 minute 20 sma on the Nasdaq and 15 minute 200 sma on the S&Ps and Dow held very well. The indices rounded off at the support and then confirmed the correction with a break higher out of the 11:00 ET correction period.

Dow Jones Industrial Average ($DJI)


The rounded lows mid-morning allowed the market to rally strongly into noon. This created a "V" formation on the 15 minute time frames that favored longer correction action in the form of a trading range. This "V' was repeated on the 15 minute time frames. The morning highs stalled the move, which was followed by congestion along those higher before breaking higher in the larger 15 minute range. Even though the action throughout the morning held support and resistance levels very well it didn't offer a lot for textbook setups. Even the continuation move formed in a manner into 12:30 ET that it could have held the range longer.

The market rounded off once again coming out of the 13:00 ET correction period. This is one of the strongest times in the day for the market to form a reversal. The selloff began gradually at first, but once the 5 minute 20 sma gave way then the pace increased dramatically. This was particularly true on the weaker Dow and S&Ps. The selloff continued within another brief bear flag that led both the Dow and S&Ps back into their morning lows by the 15:00 ET correction period. Once again the formation looked like a "V", but this time it was inverse. It confirmed the trading range on the larger time frames, but the 10 day sma remained a strong support level and the indices held onto it and pushed higher again into the closing bell.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) rose 47.55 points, or 0.6%, and closed at 7,837.11 on Tuesday. The S&P 500 ($SPX) rose 9.61 points, or 1.2%, and closed at 825.16. The Nasdaq Composite ($COMPX) rose 29.05 points, or 1.9%, and closed at 1,590.66.

Nasdaq Composite ($COMPX)


My opinion of the markets at their current level has not changed much since yesterday. The pace is continuing to shift in the markets on the 60 minute time frame over the past couple of weeks. This leaves more of a bearish bias forming, but the shift is not yet strong enough to rule out yet another attempted push into the resistance. I do think that there is a strong risk of some profit-taking ahead of the three-day weekend though, so I would use a lot more caution in the afternoon. At the very least the volume should drop off and trade will likely be choppy once again.

Dow Holds 8K Resistance into Earnings Season

(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 gapped sharply lower for the second day in a row on Tuesday. This was also the third push lower on the 15 minute time frame. As on Monday, the selling continued immediately out of the opening bell for the first 15 minutes of the session. The S&P 500 hit its 15 minute 200 period simple moving average support level at the same time as the correction hit. The Dow Jones Ind. Ave. had a little more room before testing its own. This served as a magnet for the index and it continued to pull lower into the 10:15 ET correction period before finding support. At this point it had also closed the gap zone from April 2nd.

The pace of the overall selloff was much faster on Tuesday morning than on Monday due to a larger opening gap and stronger initial downside out of the open. This extended the trend move more rapidly than the previous day. The continuation in the Dow shifted the pace of that descent intraday and the markets held the 15 minute support extremely well.

Both the QQQQ, which tracks the Nasdaq, and the DIA, which tracks the Dow, also found price support at this time with $31.50 in the QQQQ and $78 n the DIA. When you are trading or following the indices, the whole number levels on the DIA and half number levels in the QQQQ offer additional cues for timing support and resistance. The SPY tracks the S&Ps, but I don't find the whole number type of support and resistance quite as reliable in it.

Dow Jones Industrial Average ($DJI)


After turning higher off the lows, the market moved swiftly into the 5 minute 20 simple moving averages in the three indices. Stronger resistance was just overhead with the 15 minute 20 sma in the S&Ps and opening highs in the Dow, so the market pushed slightly past the 5 minute 20 sma. Fibonacci levels in the form of a 50% retracement on the S&Ps and 38.2% retracement in the Dow and Nasdaq combined with the other resistance levels on a little push into the 10:45 ET correction period and the market again began to pull lower into mid-day. Resistance levels are always the strongest when you have the greatest number of types of resistance hitting at approximately the same time.

The strength of the rally off lows helped prevent the markets from falling sharply back into the lows right away off the resistance, but the slightly higher high that took the indices past the 5 minute 20 sma also created a small bull trap. If the indices had hugged the moving average without that extra push at 10:45 ET then it could have created a text book Phoenix™, particularly with volume dropping off as it did so. In this case it would have also been the handle on a cup-with-handle pattern on the 5 minute time frame. Even though the markets held the 5 minute 20 sma zone into 11:30 ET, the slight break shifted the pace enough to prevent a strong Phoenix™ from taking hold. The choppy trade of the previous session and returned and the bears remained in charge. The 5 minute 20 sma support broke lower from the 5 minute 20 sma and the indices quickly returned to the level of the morning lows.

S&P 500 ($SPX)


Corrective moves that offer continuation patterns typically form with two waves of upside off the support in a congestive move. This formed along the lows on Tuesday mid-day and the indices broke down once again out of the 13:00 ET correction period. This was the second decent move of the day on the 5 minute time frame. The breakdown continued strongly for half an hour before hitting equal move support at 13:30 ET on the 5 minute time frame in the Dow and 15 minute time frame in the Nasdaq. At this same time the Nasdaq ran into support at the 15 minute 200 period simple moving average and 10 day sma.

From 13:30 to 15:00 ET the chop returned. Slightly lower lows in the S&Ps and Dow created a 2B buy setup on the 5 minute time frame out of the 14:00 ET correction period, but the market did not get very far. The 5 minute 20 sma held. The indices hugged this resistance level, however, and the result was a reverse head and shoulders pattern on the 5 minute time frame that triggered shortly before the 15:00 ET correction period. The market popped quickly back to the mid-day trading range before falling back once again into the close. Overall the session followed through with the expectation I expressed yesterday of more choppy overall trade punctuated by brief, yet rapid trend moves intraday.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 186.29 points, or 2.3%, and closed at 7,789.56 on Monday. Nearly all of the Dow's 30 index components closed in negative territory. Citigroup (C) did manage a 1.47% gain, but losses such as the 11.89% decline in General Motors (GM) and a 5.94% loss in Caterpillar (CAT) overshadowed it.

The S&P 500 ($SPX) fell 19.93 points, or 2.4%, and closed at 815.55. Financials and consumer discretionary shares fronted the losses. Energy shares also faltered. Crude oil futures closed under $50 a barrel at $49.15 a barrel in New York.

The Nasdaq Composite ($COMPX) fell 45.10 points, or 2.8%, and closed at 1,561.61.

The pace is continuing to shift in the markets on the 60 minute time frame over the past couple of weeks. This leaves more of a bearish bias forming, but the shift is not yet strong enough to rule out yet another attempted push into the resistance. At the moment I am watching for a pull back into the 20 day sma and then this additional attempt at a high before a longer daily correction once again kicks in.

Market Teeters at Resistance as Earnings Season Begins

Market Teeters at Resistance as Earnings Season Begins

(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 markets held up well on Monday even though they continued to correct off the daily resistance zone. This zone is the most noticeable as the middle of the range from late January into the middle of February earlier this year and the 100 day simple moving average levels in the S&P 500 and Dow Jones Industrial Average.

The Dow Jones Industrial Average ($DJI) closed lower on Monday by 41.74 points, or 0.5%, at 7,975.85 at the zone of the 8k price resistance. Approximately 2/3 of the Dow's 30 index components lost ground. The leaders included a 4.56% decline in Citigroup (C), a 3.69% decline in JPMorgan (JPM), and a 3.18% drop in Alcoa (AA). General Motors (GM) led the Dow's gainers with a close higher by 8.10%. It was followed by a gain of 2.29% in General Electric (GE).

Dow Jones Industrial Average ($DJI)


The S&P 500 ($SPX) fell 7.02 points, or 0.8%, and closed at 835.48. Crude oil futures fell 2.8% to $51.05 a barrel in New York. This put pressure on energy stocks, which were among the largest decliners in the S&P, along with the financials. The S&P Banking Index was down 5.4% on the day after fear circulated that loan losses could easily exceed the levels seen during the Great Depression.

The Nasdaq Composite ($COMPX)closed lower by 15.16 points, or 0.9%, and closed at 1,606.71. The proposed deal for the acquisition of Sun Microsystems (JAVA) by IBM (IBM) hit a wall on Monday and it sent tech stocks lower. JAVA plunged nearly 23% on the fallout. IBM held up much better, but still lost 0.6%. Cisco Systems (CSCO) added to the pressure in the technologies. It fell 3.5% on a downgrade by Goldman Sachs.

Alcoa's earnings on Tuesday mark the unofficial start of earning season. Expectations overall this quarter are quite low. The consensus is that this will make it easier for companies to match or beat expectations this time around. If this proves to be the case, then we are not as likely to experience another sharp drop in the indices. Given the current shift in pace in the S&Ps and Dow, however, this might be difficult to avoid. The Nasdaq will not likely test or break last month's lows anytime soon, but unless the S&Ps and Dow can clear the current daily resistance with a swift push higher then they remain at risk.

I am very hesitant to make any serious commitments on the long side at the moment. I will stick to the shorter intraday time frames for setups in that direction throughout most of the week and see how things shape up for corrections on the daily charts. Many of the big banking stocks post earnings next week and a lot of eyes will be on them.

S&P 500 ($SPX)


I found Monday's action in the indices to be more difficult overall than usual. Support and resistance levels held well, but there was a lot of chop intraday and volume was light. It was very evident, particularly in the afternoon, that many are becoming leery of the indices at these current levels and are holding their breath. The session began with a downside gap into the opening bell that took the indices under their afternoon lows from Friday. Since the markets had closed at or near intraday highs on Friday, this gap created a form of bull trap. The result was a continuation of a bearish bias throughout the morning. The 9:45 correction period slowed the opening selloff and the market bounced into the 10:15 ET correction period, but the 5 minute 20 sma held the buyers in check and the market quickly returned to lows and almost immediately surpassed them.

Nasdaq Composite ($COMPX)


After 10:30 ET am things began to quiet down. The Nasdaq found support at this time from last Thursday's lows, while the S&Ps and Dow slowly pushed through Friday's. These two indices had shown greater weakness on Friday, so the breakdown that took place with the opening gap created a type of Avalanche™ on the 30 minute charts in those indices. This left room for them to continue lower until they tested a zone of equal move support on that time frame as compared the the descent off Thursday's highs into Friday's morning lows. This took place between 12-12:30 ET early Monday afternoon.

The market reversed course intraday at 12:30 ET. The pace increased on the upside to easily break the 5 minute 20 sma that had held it in throughout the morning. It quickly became support. The first resistance on a 5 minute time frame hit with the 13:00 ET correction period. From this point onward, however, things became more messy. Even though the spirit of technical strategies such as bull flags remained in tact, their formation was rather abstract. Prices overlapped a great deal from one bar to the next on the 5 and 15 minute time frames, but the markets continued to hold support and resistance levels well throughout the remainder of the session.

The greater amount of chop made the zones of support and resistance wider than normal, however, and this would have increased the risk for many traders of getting flushed out of positions or bailing at the wrong time due to uncertainty. Having experienced this a great deal myself over the years, I tend to be less active in the indices when the market is trading in such a manner. Instead I move my focus to individual stocks or other securities to locate smoother trends and reduce these risks. We are likely to see more of this type of action this week, interrupted only briefly with stronger intraday trends.

Unemployment rate hits 8.5%

Market Faces Shortened Trading Week Ahead of Q1 Earnings Season

(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 markets finished off a four-week rally on Friday with a gain of 39.51 points, or 0.5%, in the Dow Jones Industrial Average ($DJI). This took it squarely into the middle of the target level we have been following over the past several weeks with a close at 8,017.59 on Friday. This was the first time the Dow has closed above 8,000 in nearly two months. This marks the first four-week gain in nearly a year and a half and the 4-week rally of 20.35% is the largest 4-week winning streak since the 1930s. Last week's gains accounted for 3.1% of the overall rally.

Dow Jones Industrial Average ($DJI)


The S&P 500 ($SPX) climbed an additional 8.12 points, or 1%, on Friday to end its 4-week streak at 842.50. It's gains for the week came to 3.3%. Crude oil futures closed relatively unchanged on Friday at $52.51 per barrel.

The Nasdaq Composite ($COMPX) closed higher by 19.24 points, or 1.2% on Friday at 1,621.87. It posted a weekly gain of 5% and a 4-week gain or 25.4%. The Nasdaq's gains on Friday had assistance from Research In Motion (RIMM). The BlackBerry maker reported better-than-expected fourth-quarter earnings late Thursday and the company's shares jumped 20.8% on Friday. All of that gain took place afterhours, however, and the stock spent Friday's session trading in a range along the opening highs.

S&P 500 ($SPX)


Friday's advances came despite the fact that the U.S. unemployment rate has hit its highest level since November 1983. Since making new lows on the year last month, the market has been doing incredibly well shrugging off negative economic data, showing that market participants had already factored in the news. On Friday morning the Labor Department announced that U.S. nonfarm payrolls fell 663,000 last month, while the unemployment rate shot to 8.5%. So far 5.1 million jobs have been lost since the economy took a turn and many economists are predicting that the unemployment rate could hit a staggering 10% before the year is out. This would be approximately the same level as seen in November 1982 (10.2%). During the Great Depression the jobless rates was approximately 25%.

Nasdaq Composite ($COMPX)


First-quarter earnings season kicks off this week. As always, it is led by Alcoa (AA). Alcoa reports its earnings after the closing bell on Tuesday. Earnings will then pick up the following week with the likes of the top Dow financial companies: Goldman Sachs (GS), Citigroup (C), and J.P. Morgan & Chase (JPM). Intel's (INTC) earnings are also due out that week. Expectations are low, so companies that manage to meet or beat estimates should hold up pretty well, but we are also becoming very extended now in the short term and are due for a larger correction on the daily time frames in the overall market, so use caution on new swingtrades on the upside at this point. All three of the major indices have hit the daily target zones we have been tracking the past several weeks.

Economic Reports and Earnings Events This Week

From the desk of Toni Hansen
http://www.tonihansen.com

Economic Reports and Events This Week

Monday, April 6, 2009
No major economic indicators scheduled.

Tuesday, April 7, 2009
7:45 a.m. ICSC Chain Store Sales Index For Apr 4: Previous: +1.1%.
8:55 a.m. Redbook Retail Sales Index For Apr 4: Previous: +0.2%.
2:00 p.m. Mar Federal Reserve FOMC Minutes
3:00 p.m. Feb Consumer Credit: Expected: -$2.9B. Previous: +$1.76B
4:30 p.m. API Oil Industry Report For Apr 3
5:00 p.m. ABC/Wash Post Consumer Conf For Apr 4: Previous: -49.

Wednesday, April 8, 2009
7:00 a.m. MBA Mortgage Application Refinance Index: Previous: +3.7%.
10:00 a.m. Jan Wholesale Trade: Expected: -0.8%. Previous: -0.7%.
10:30 a.m. U.S. Energy Dept Oil Inventories

Thursday, April 9, 2009
8:30 a.m. Initial Jobless Claims For Apr 4 Week: Expected: -4K. Previous: +12K.
8:30 a.m. Feb Trade Balance: Expected: 35.9B. Previous: 36.03B.
8:30 a.m. Mar Import Prices: Expected: +0.9%. Previous: -0.2%.
10:00 a.m. DJ-BTMU Business Barometer For Mar 28: Previous: +0.4%.
10:30 a.m. EIA Natural Gas Inventories

Friday, April 10, 2009
2:00 p.m. Mar Federal Budget Balance: Expected: -$157.5B. Previous: -$192.7B.


Key Earnings Announcements This Week:

Monday, April 6, 2009
Before: -
During: -
After: APOG, BLUD, SGK (?)

Tuesday, April 7, 2009
Before: CHTT, ISCA
During: -
After: AA, BBBY, LNDC, MIND, MOS, RECN, RT

Wednesday, April 8, 2009
Before: STZ, FDO, GBX, RPM, SGR
During: JOSB (?)
After: CHP (?), PBY, SMSC, WDFC

Thursday, April 9, 2009
Before: FCSX, MTRX, MOV, VIP (?)
During: -
After: CHINA (?), CBK, EXM, DNA (?), TK (?)

Friday, April 10, 2009
Before: -
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.