Economic Reports and Earnings Events June 1-5

Economic Reports and Events This Week

Monday, June 1, 2009
8:30 a.m. Apr Personal Income: Expected: -0.2%. Previous: -0.3%.
8:30 a.m. Apr Personal Spending: Expected: -0.1%. Previous: -0.2%.
10:00 a.m. Apr Construction Spending: Expected: -0.9%. Previous: +0.3%.
10:00 a.m. May ISM Manufacturing Index: Expected: 41.5. Previous: 40.1.

Tuesday, June 2, 2009
7:45 a.m. ICSC Chain Store Sales Index For May 30: Previous: +0.8%.
8:55 a.m. Redbook Retail Sales Index For May 30: Previous: -0.4%.
10:00 a.m. Apr Pending Home Sales: Expected: +0.5%. Previous: +3.2%.
4:30 p.m. May 29 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For May 30: Previous: -47.
May Auto Sales

Wednesday, June 3, 2009
7:00 a.m. May 29 Mortgage Refinance Applications: Previous: -18.9%.
8:15 a.m. May ADP Employment Survey: Expected: -550K. Previous: -491K.
10:00 a.m. May ISM Non-Manufacturing Index: Expected: 45.0. Previous: 43.7.
10:00 a.m. Apr Factory Orders: Expected: +1.1%. Previous: -0.9%.
10:30 a.m. May 29 U.S. Energy Dept Oil Inventories

Thursday, June 4, 2009
8:30 a.m. Initial Jobless Claims For May 30 Week: Expected: -3K. Previous: -13K.
8:30 a.m. 1Q Productivity: Expected: +1.2%. Previous: +0.8%.
8:30 a.m. 1Q Labor Costs: Expected: +2.9%. Previous: +3.3%.
10:00 a.m. DJ-BTMU Business Barometer For May 23: Previous: -0.2%.
10:30 a.m. May 29 EIA Natural Gas Inventories
May Chain-Store Sales

Friday, June 5, 2009
8:30 a.m. May Non-Farm Payrolls: Expected: -525K. Previous: -539K.
8:30 a.m. May Unemployment Rate: Expected: 9.2%. Previous: 8.9%.
3:00 p.m. Apr Consumer Credit: Expected: -$7.3B. Previous: -$11.1B.


Key Earnings Announcements This Week:

Monday, June 1,
After: LFG

Tuesday, June 2, 2009
Before: DAKT, HGG, LAYN, NOOF (?), TK (?), UNFI
During: THO (?)
After: APSG, BOBE, GIII (?), HOV, LULU (?), MIND, TUTR (?), SNDA, NCTY (?), PAY, VIMC (?)

Wednesday, June 3, 2009
Before: ABM, HOKU (?), JOYG, TOL
During: JOSB (?)
After: ADCT, PSS, CPRT (?), CYBX, DDMX, DCP, FCEL (?), GEF, MATK, SAI

Thursday, June 4, 2009
Before: ALOG, BRLI, BTH (?), CMN, CIEN, CONN, CRAI (?), MDCI, SCMR (?), UTIW, MTN, WSM (?)
After: CHP (?), CAE, CMTL (?), COO, FMCN (?), GES (?), ZQK (?), SEAC, ULTA, WIND

Friday, June 5, 2009
Before: AMWD


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 Follows Through With Late Day Breakout

Market Follows Through With Late Day Breakout

(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! Trading was light throughout most of the day on Friday with the indices stuck in a very narrow intraday range. The indices had gapped slightly higher following the revised first-quarter gross domestic product which came in better than its initial reading of negative 6.1%. The revised number was negative 5.7%. The Chicago Purchasing Managers Index, however, came in below expectations at 34.9 in May. April's reading was 40.1 and it was expected to hit 42 in May. Anything under 50 indicates contraction.

The market fell off premarket highs going into the open, but overall it did not have a strong reaction to the early economic data that also included Thomson Reuters and the University of Michigan's consumer confidence report soon after the open. Consumer confidence hit its highest reading since September at 68.7 for May. It was at 65.1 in April. This was the third month in a row that the index has risen. It hit a low of 55.3 last November and has averaged 88.2 over the past decade, so despite the increase it still remains quite low.

Dow Jones Industrial Average ($DJI)


The market held technical levels extremely well on Friday, but trade was light and choppy throughout most of the day. Following the open, the indices pulled lower into the 15 minute 20 sma, but then pushed back up into 10:30 ET. On the 15 minute time frame we can see that the afternoon action from Thursday and the action into Friday morning created a momentum shift where Thursday's mid-day rally continued, but at a much slower pace. In other words: the upside momentum shifted. This is a strong correction pattern off highs that triggered coming out of that 10:30 ET retest of the zone at Friday morning's highs. Because that retest was still a strong pace on the smaller time frames, however, the pace of the correction was steady, but had a lot of overlap from bar to bar on the 5 and 15 minute time frames.

The result of this larger degree of overall was that a 15 minute continuation pattern for afternoon selling failed to form. Instead, when the markets bounced out of the 12:00 ET correction period, the indices hugged the 5 minute 20 sma resistance and created a 5 minute Phoenix™ pattern that set up coming out of the 13:00 ET correction period. It led to a move higher into the zone of the morning highs. It was not strong enough to adequately retest the exact highs, however, and the pace instead became more suggestive of a longer intraday trading range in the making.

S&P 500 ($SPX)


The indices hugged the 5minute 20 sma zone between 13:45 ET and 14:15 ET. They pushed to slightly higher highs on the 5 minute time frames, but volume was light and this retest merely created a 2T reversal pattern. The pattern triggered when the smaller trend channel into that second high broke lower and was confirmed by the break of the 5 minute 20 sma support.

The market pulled back into the 5 minute 200 sma that had served as support earlier in the session. Once again the reversal periods held perfectly and the channel from the pullback broke higher out of the 15:00 ET correction period.

Another Phoenix™ followed on the 5 minute charts into the end of the day, albeit more sloppy than the mid-day one. The base that created the Phoenix broke with accelerating momentum into the closing bell. This rally triggered the triangle breakout on the indices that we first looked at two days ago. I included the smaller intraday chart I had compared the daily time frames to on the Dow and S&Ps. This trigger came after the momentum shifted intraday like I discussed in yesterday's column, by basing at the upper channel level throughout most of the day on Friday.

Unfortunately, the base was not long enough to sustain the pace of this breakout rally into next week. The market ran into a similar problem on the intraday charts and you can see that the ES that was shown on those charts in the little blue inset actually pulled back into the triangle's range before pushing higher on Wednesday. This is in line with the expectations I expressed earlier this week that an upside breakout from the daily range would be more likely to push higher with a slower trend channel once the upper end of the range broke. The 200 day sma has a decent chance of breaking slightly, but 9,000 is going to be a very strong price resistance level for the Dow.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 96.53 points, or 1.15%, to close at 8,500.33 on Friday. It ended the month higher by 4.1%. It is still down 3.15% year-to-date. Coca-Cola (KO) led the Dow with a gain of 4.8%. Pfizer (PFE) and Merck (MRK) followed with gains of 3.4% and 3% respectively.

The S&P 500 ($SPX) rose 12.31 points, or 1.36%, and closed at 919.14. The S&P 500 posted a 5.3% gain for the month and is up 1.76% YTD. Crude oil futures were higher once again on Friday. They ended the week at $66.31 a barrel, up 7.52% for the week and 48.68% year-to-date. Nearly 30% of that rally came in May alone and the commodity stocks were amongst Friday's best performers with the gains in the index led by the materials stocks. This includes the previous metals. Gold closed higher by 10% in May, while silver rose 26.7%. Meanwhile, the U.S. dollar fell against the rest of the currencies.

The Nasdaq Composite ($COMPX) rose 22.54 points, or 1.29%, and it closed at 1,774.33 on Friday. The Nasdaq ended the month higher by 3.3% and is up 12.51% YTD.

Earnings are again light this coming week. The main ones will be in the housing sector and include Hovnanian (HOV) on Tuesday and Toll Brothers (TOL) on Wednesday. Overall economic data will be heavier with personal income and spending on Monday, pending home sales on Tuesday, jobless claims on Thursday, and non-farm payrolls and the unemployment data on Friday. Next week is also expected to bring with it a bankruptcy filing by General Motors (GM). Many had speculated that such an announcement would come this past week, but now eyes are on it for Monday.


Notice: I will be in Iowa for my annual camping/road trip to see my family beginning next Wed. until the following Friday. As a result, no Market Action Letter will be posted during that time. Don't worry though! I'll be back before you know it! For those of you in Cali., don't forget that the Online Trading Expo is also being held next week! Even though I can't make it to the LA expo, I will definitely be at the one in Las Vegas in November, so I hope you can join me there!


http://www.tradingfrommainstreet.com/images/banners/MBT468x60a.jpg

http://www.ino.com/info/39/CD3633/&dp=0&l=0&campaignid=9

Toni Hansen's Facebook profile

Market Maintains Daily Range

Market Maintains Daily Range

(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.)
http://www.tradingfrommainstreet.com/images/facebook2.gif

Good day! The markets opened higher on Thursday following steep afternoon selling the day before on news of rising rates and gasoline prices. The open, however, placed the major market indices squarely into strong resistance levels from the prior two days, as well as their 15 minute 20 period simple moving average resistance zones. In the S&Ps this was also the 5 minute 200 sma and the market was unable to push past these strong intraday price levels early on. Instead they fell into a trading range, hugging the resistance zone into the 10:00 am ET new home sales data.

Dow Jones Industrial Average ($DJI)


The home sales data did nothing to boost the market's confidence level. In fact, the news was rather disappointing. The Commerce Department reported that April's new-home sales did not meet economists' expectations and climbed only 0.3%. They were flat in the Northeast and Midwest, rose 1.9% in the South, but continued to fall by 3.8% in the West. Sales are down 34% compared to the same period last year. Additionally, March's new-home sales numbers were revised sharply lower. On top of rising interest rates, the impact of this news on the market was a sharp breakdown out of the opening range on the intraday time frames.

The morning breakdown lasted until approximately the 10:15 ET correction period. At this time the Nasdaq futures hit 15 minute 200 sma support intraday, while the Dow and S&P came into their lower trend channel support for the third low since breaking down the previous afternoon. This exhausted the trend move, but the support helped turn the trend around.

S&P 500 ($SPX)


Since the pace of the morning decline was stronger than average, the market did not bounce sharply back to highs right away. They rounded off at lows instead. The Dow and S&Ps started to pull higher around 10:30 ET, but the Nasdaq formed a 5 minute Phoenix™ pattern instead by falling into a range until the 11:00 ET correction period and then breaking higher. The indices regained momentum at this point and continued sharply higher into 110:15 ET before continuing back into the morning congestion and resistance level into noon.

Reversal periods continued to hold well and the market pulled back once again at 12:00 ET. The slightly higher highs on the 5 minute time frame allowed for stronger selling, but volume was light and the indices held onto the 15 minute 20 sma resistance levels to create Phoenix-type patterns on this time frame as well. The market took off sharply on the upside out of the 13:00 ET correction period. The market was relieved when an auction of 7-year Treasurys produced a yield in line with expectations.

A bull flag on the 5 minute time frame formed into the 14:00 ET correction period, but the base was not long enough to correct from the sharp 13:00 rally. As a result, the market didn't make it as far, but all three of the indices pulled back up into resistance from the previous day's congestion before falling into more choppy trade into the closing bell.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 103.78 points, or 1.25%, to close at 8,403.80 on Thursday. Financial shares did well in Thursday's session. JP Morgan (JPM) rose 5.74%. Bank of America (BAC) climbed 3.57%. American Express (AXP) rose 3.40%. Only 4 securities out of the Dow's 30 index components closed in negative territory. The greatest decliner was Home Depot (HD) with a loss of 2.70%, followed by General Motors (GM) with a loss of 2.61%.

The S&P 500 ($SPX) rose 13.77 points, or 0.54%, and closed at 906.83. Crude oil futures were up $1.63 to close at $65.08 a barrel in New York. This pushed energy shares higher and gas prices have also been on the rise. All of the S&P 500's energy stocks posted gains.

The Nasdaq Composite ($COMPX) rose20.71 points, or 1.20%, and it closed at 1,751.79 on Thursday.

The daily triangle in the indices doesn't have a strong directional bias for a breakout yet. It has refused to hug one end of the range over the other and the pace has also not slowed in one direction by enough to form a slower-than-average paced trend that would suggest a breakout in the opposite direction of that slower trend. If the market breaks the range without either of these things occurring, then it will support the bias for a weaker overall breakout with more chop from one day to the next in the days that follow the breakout. This can result in a more rapid reversal when the channel from that breakout attempt fails. This creates a higher risk environment for swingtraders and investors.


Notice: I will be in Iowa for my annual camping/road trip to see my family beginning next Wed. until the following Friday. As a result, no Market Action Letter will be posted during that time. Don't worry though! I'll be back before you know it! For those of you in Cali., don't forget that the Online Trading Expo is also being held next week!

Market Struggles With Serious Case of Whip-Lash

Good day! The market's rose sharply on Tuesday following the three-day weekend in the U.S., but the move extended itself very early on in the session with a much larger-than-average move in the first 30 minutes of the day. The indices crept higher in the afternoon to close near the day's highs, but unfortunately such action is not usually a great thing for any security, let alone the overall market. A run such as Tuesday morning's tends to exhaust the security or index it takes place in and makes it difficult to sustain the momentum and even the trend for very long following the move. This is what led me to believe that if the market does push higher out of this daily range that we will see it do so at a more gradual pace than the rally that had been in play up until a few weeks ago. For example, if it attempts to break the highs of the range, then it may just act like the Dow Jones Industrial Average did on Wednesday morning when it tried to break higher out of a triangle early in the session to continue Tuesday's run.

S&P 500 ($SPX)


That run on Tuesday left the market a little scared. It was unable to push through the upper levels of resistance from the past several weeks and it was noticeable early on that the indices were undecided heading into the day. The market did attempt to break higher around 11:45 ET in the Dow, and the Nasdaq even managed a strong continuation earlier in the session, but by mid-day the pace was shifting once again and action within the lunch-time range began to shift.

The mid-day pace change was a gradual one to begin with. The indices began to pull back around 12:30 ET, but the pace of the selling was still gradual despite the 5 minute 20 sma giving way as support. At 13:00 ET the market attempted to hold early afternoon lows, but the rally lasted 5 minutes before faltering. It completely failed to bust the 5 minute 20 sma that had now turned into resistance for the indices. At 13:30 ET the lows gave way. The channels broke and momentum increased. The Nasdaq fell sharply back to morning lows, while the Dow found support from early congestion on a 15 minute time frame and the S&Ps found support at their 15 minute 200 sma and 5 minute 200 sma.

Dow Jones Ind. Average. ($DJI)


The momentum in market shifted as this early afternoon support hit, but slightly lower low leading to a momentum reversal pattern at 14:30 ET as a buy setup didn't get far. The larger time frame bias in favor of the bears prevailed and the 5 minute 20 sma resistance held, leading to yet another selloff into the final 30 minutes of trade. At about 15:30 ET the Nasdaq hit support at the 5 minute 200 sma, while the S&Ps and Dow both found support from congestion levels over the last several days. All three of the major indices closed just barely off their intraday lows. This was the 38% Fibonacci retracement zone for the Nasdaq futures on the 15 minute time frame and the 62% retracement zone for the S&P 500 futures.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 173.47 points, or 2.05%, to close at 8,300 on Wednesday. Eyes t

The S&P 500 ($SPX) fell 17.27 points, or 1.9%, and closed at 893.06. Crude oil futures were up a dollar to close at $63.45 a barrel in New York.

The Nasdaq Composite ($COMPX) fell 19.35 points, or 1.10%, and it closed at 1,748 on Wednesday.

It will be important to pay the most attention to intraday changes in momentum at this time. Wednesday's home sales data for existing homes didn't move the market a great deal, although it did create an influx in volume. Homes sales rose, but the focus was upon foreclosures and short sales, which consisted of approximately 45% of last month's existing-homes sales. Meanwhile, inventories rose 8.8% in April. The median sale price fell from $201,300 at this time last year to $170,200 (-15.5%) this April. New home sales data comes out on Thursday.


Notice: I will be in Iowa for my annual camping/road trip to see my family beginning next Wed. until the following Friday. As a result, no Market Action Letter will be posted during that time. Don't worry though! I'll be back before you know it! For those of you in Cali., don't forget that the Online Trading Expo is also being held next week!

Market Shrugs Off Holiday Hangover

Market Shrugs Off Holiday Hangover

(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! Despite steady selling in the futures market on Monday and a sizable gap lower into Tuesday's opening bell to kick off the trading week for U.S. exchanges, the market had a very strong session. The index futures began to pull higher out of 6:30 am ET, but then came back in slightly ahead of the opening bell. As soon as that bell rang, however, the markets shot higher with one of the strongest upside moves we've seen in months. Within just the first 30 minutes of trade the indices had established a larger-than-average daily range.

Dow Jones Industrial Average ($DJI)


Tuesday's rally followed four straight sessions of losses for the major indices, although they were continuing to hold daily support levels even into the open. In the S&P 500 and Dow Jones Industrial Average this zone was the 20 day simple moving average. It was the 200 day sma in the Nasdaq Composite.

As I discussed in yesterday's column, all three indices were attempting to form triangle patterns on the daily charts. Since the pace of the selling slowed like I discussed, this allowed the markets to push back higher on the 60 minute time frames and makes it much more likely that the indices will test larger daily resistance more strongly. This resistance will be the 200 day sma for the Dow, which is currently just under 8,830 and declining slightly. I do not expect the pace to continue strongly higher, but rather that we will see a return to more choppy price action with greater overlap from one day to the next into that resistance zone.

If the pace does remain stronger-than-average on the upside, then the market can break the 200 day sma resistance before a larger correction. A choppier move higher at this point, on the other hand, would increase the odds of a very sharp breakdown and correction once the lower end of the uptrend channel breaks. This will be particularly true if the S&Ps and Dow hug the 20 day sma as they attempt to push higher.

S&P 500 ($SPX)


Tuesday's rally came as a relief to many market participants. Concern has been on the rise due to the extension on the upside on the weekly charts and worries that a larger pullback is around the corner once again. Additionally, rising interest rates are starting to return the focus to inflation worries.

The consumer confidence level, however, has been on the rise. On Tuesday it was announced that consumer confidence rose at a pace not seen since 2003 to hit its highest level since last September. The index was revised higher for April and hit 54.9 in May. Economists had been expecting a ready of 43, so the news came as a pleasant surprise! The morning rally, however, exhausted the indices. Even though they continued to hold up and even climb slightly higher in the afternoon, the rest of the day was fairly choppy.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) gained 196.17 points, or 2.37%, to close at 8,473.49 on Tuesday. Eyes this week will remain on General Motors (GM) as speculation continues that the company will be filing for bankruptcy protection as early as the end of the week. Such an action would necessitate the removal of GM from the Dow Jones Industrial Average.

The S&P 500 ($SPX) rose 23.33 points, or 2.63%, and closed at 910.33. Crude oil futures were up slightly to close at $62.45 a barrel in New York.

The Nasdaq Composite ($COMPX) rose 58.51 points, or 3.45%, and it closed at 1,750.43 on Tuesday.

Watch out for existing home sales on Wednesday, and new home sales data on Thursday. This data can easily influence the morning action over the next several days.

Market Struggles to Choose Sides Ahead of Holiday 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! Trading was light on Friday as the market wound down ahead of the Memorial Day weekend. The U.S. markets will be closed on Monday for the holiday, so light trading is typical ahead of a three day weekend. The indices have been in a holding pattern for several weeks, however, as they pushed into the zones of their 200 day simple moving averages on the 7th.

The pace of the pullback made it likely that the general zone of resistance would hold and lead to a longer correction, but the door was still open for a retest of those highs this past week. When it came down to it, however, the indices failed to accomplish that feat. A strong-paced move back into the zone of the previous daily highs fell just short on Wednesday the 20th, resulting in the start of a triangle formation along the daily highs. The indices had reversed at the 10:15 ET correction period despite a strong gap higher and upwards move out of the opening bell. They then continued to fall throughout the remainder of the session and into the next afternoon.

Dow Jones Industrial Average ($DJI)


The decline continued into Thursday and returned the Dow Jones Industrial Average and S&P 500 back to their 20 day simple moving average support levels. These had held just over a week earlier when they were first tested, but if the indices continue to hug this support level this time around then that support can easily give way into the 50 day simple moving averages.

If the market does not stall here and hug the support, and instead it attempts to push lower into early this week or bounce higher again on Tuesday, then the 60 minute time frames can still create a continuation move on the upside into next week. The strong pace of the selling will have to slow into early this week if this current zone is going to hold, however, to allow this formation. We would want to see slow downside with the potential for a slightly lower lows on the 60 minute charts over the next day or two and then another push higher into the second half of the week.

S&P 500 ($SPX)


It will still be difficult to break that 200 day sma, so the pace of an attempt to do so would be critical. If the Dow and S&Ps can push into those 200 day smas on stronger-than-average momentum, then they have a good chance of moving up into the next higher resistance level, but if the indices just stair-step up into that zone then they can reversal very quickly just as they did on the 5 minute time frames in the charts from Friday. In these examples we can see the same attempt to hold a second low in the early afternoon, but in this case it was the 15 minute 20 sma that held as support instead of the 20 day sma and the 5 minute 200 sma that held as resistance as opposed to the daily 200 sma.

I have shown this two-wave continuation attempt in green on Friday's charts. After attempting to break higher after a second low around 13:30 ET, the indices failed to accelerate coming off the 15 minute 20 sma and the attempted breakout higher could not bust the 200 sma on the 5 minute time frame. The outcome was a sharp pullback into the closing bell with all three indices closing in negative territory.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 14.81 points, or 0.18%, to close at 8,277.32 on Friday. This coming week is a shortened trading week and a lot of eyes will be watching General Motors (GM). GM closed at $1.43 on Friday amidst rising speculation that the company will be filing for bankruptcy protection as early as the end of the week. Such an action would necessitate the removal of GM from the Dow Jones Industrial Average.

The S&P 500 ($SPX) fell 1.33 points, or 0.15%, and closed at 887.00. Crude oil prices broke higher on the 18th and continued to hold up strongly into the weekend, closing at $61.67 a barrel on Friday. Retail gas prices have been on the rise as well. They hit $2.39 a gallon on Friday, which is exactly what I paid at the pump today as well.

The Nasdaq Composite ($COMPX) fell 3.24 points, or 0.19%, and it closed at 1,692.01 on Friday.

It is quite possible that the strongest news this coming week will be from the housing front. On Tuesday is the home prices index, followed by existing home sales on Wednesday, and new home sales data on Thursday. This data could easily influence the follow through on any attempt the market makes to pull higher. Expectations are that existing home sales will fall while new home sales will remain relatively unchanged.

Economic Reports and Earnings May 25-29

Economic Reports and Events This Week

Monday, May 25, 2009
No economic events are scheduled for today. Market holiday.

Tuesday, May 26, 2009
9:00 a.m. Mar S&P/Case-Shiller Home Price Index: Previous: -18.8%.
10:00 a.m. May Conference Board Consumer Confidence: Expected: 43. Previous: 39.2.
10:00 a.m. May Richmond Fed Manufacturing Index: Previous: -9.
10:30 a.m. May Dallas Fed Mfg Production Index: Previous: -8.9.
5:00 p.m. ABC/Wash Post Consumer Conf For May 23: Previous: -45.

Wednesday, May 27, 2009
7:00 a.m. May 22 Mortgage Application Refinance Index: Previous: +4.5%.
7:45 a.m. ICSC Chain Store Sales Index For May 23: Previous: -1.2%.
8:55 p.m. Redbook Retail Sales Index For May 23: Previous: -0.2%.
10:00 a.m. Apr Existing Home Sales: Expected: +1.8%. Previous: -3.0%.
4:30 p.m. May 22 API Oil Industry Report

Thursday, May 28, 2009
8:30 a.m. Initial Jobless Claims For May 23 Week: Expected: +4K. Previous: -12K.
8:30 a.m. Apr Durable Goods Orders: Expected: +0.6%. Previous: -0.8%.
10:00 a.m. Apr New Home Sales: Expected: +2.5%. Previous: -0.6%.
10:00 a.m. DJ-BTMU Business Barometer For May 16: Previous: unch.
1:00 p.m. May 22 U.S. Energy Dept Oil Inventories

Friday, May 29, 2009
8:30 a.m. 1Q Preliminary GDP: Expected: -5.5%. Previous: -6.1%.
8:30 a.m. 1Q Corporate Profits: Previous: -28.4%.
9:45 a.m. May Chicago PMI: Expected: 42. Previous: 40.1.


Key Earnings Announcements This Week:

Monday, May 25,
Before: -
During: -
After: -

Tuesday, May 26, 2009
Before: CSIQ, REDF
During: -
After: JRJR, DCI, TTWO, TMRK

Wednesday, May 27, 2009
Before: AEO, AZO, BWS, CHRS, CHS, CSUN, CBRL, DLTR, DWS (?), FLO, HOKU (?), RL, ROLL, SPLS, SYNO, ZLC
During: -
After: AFCE, BCSI, CWTR, DMND, HEI, JAS, NZ, SIGM, TIVO

Thursday, May 28, 2009
Before: ACAT, BIG, COST, FRED, FREE, GCO, HNZ, MENT, MNRO, MOV (?), PERY, SAFM, SCVL, SCMR (?), TSL
During: -
After: DELL, ESL, JCG, MRVL, NOVL, OVTI, SGK (?), SINA (?), WTSLA

Friday, May 29, 2009
Before: FRO, TIF
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 Onto Key Daily Support

Market Holds Onto Key Daily Support

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


Good day! The market bounced back strongly in Monday's session, holding the 20 day simple moving average support in the S&P 500 and Dow Jones Industrial Average very firmly. This also meant that our bullish bias that favors a retest and even the strong possibility of a slightly higher high in the indices on the daily time frame remains in place and has completed the first step it needed to follow through on that bias. The indices had turned higher in premarket trade after testing strong price support just before midnight in the futures. They turned higher into the early morning hours and opened with a strong upside gap.

Dow Jones Industrial Average ($DJI)


When the market forms a larger-than-average gap into the opening bell, which is the difference between the previous day's closing price and the current day's opening price, one of my favorite strategies is to mark the 15 minute highs and lows. I then take a position in the direction that those highs or lows break with a stop on the opposite side. When the gap is triggering a setup on a larger time frame you want to be cautious of trying to trade gap closures, whereas if the market gaps into strong resistance or support after a multi-day move, then you want to be more cautious taking triggers in the direction of the gap.

With these in mind, Monday's open was one that triggered a bounce off the daily support that we had been watching, which meant that gap closure attempts would be higher risk. At the same time, the Dow opened just shy of the previous day's highs and the 15 minute 200 sma. The 15 minute highs broke almost right away following those 15 minute highs, but the larger time frame resistance on the 15 minute charts held the market in a bit longer before the gap trade confirmed out of the 10:15 ET correction period.

S&P 500 ($SPX)


The remainder of the session was spent in steady upside waves with the 5 minute 20 period simple moving average acting as support. Most of the waves of buying came after two-wave corrections or bases that were also visible on the 15 minute time frame. None of the pushes higher lasted for more than about 15 minutes from the time the corrective ranges broke, but the accumulation of each step higher resulted in some of the best daily gains we've seen recently for the indices.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 235.44 points, or 2.85%, to close at 8,504.08 on Monday. Home improvement centers did well in Monday's session. Lowe's (LOW) shares climbed 8.1%, while Home Depot (HD) rose 6.6% when LOW's earnings surpassed expectations. HD reports this morning.

The S&P 500 ($SPX) rose 26.83 points, or 3.04%, and closed at 909.71. The homebuilders followed in Lowe's footsteps and posted solid gains on news that homebuilder confidence is improving according to May's housing market index. Lennar (LEN) rose 13.7%, while Pulte Homes (PHM) rose 7%. Today will bring with it the news for April's housing starts. Given the extension on Monday, the market will have a harder time sustaining the same momentum it saw on Monday. A larger intraday correction is likely, although there is currently nothing to suggest it would be a substantial one in terms of price action.

The Nasdaq Composite ($COMPX) rose 55.22 points, or 3.11%, and it closed at 1,732.36 on Monday.

Note: I will be out of town attending a conference over the next several days. I am hoping to return in time late Thursday evening to put out a Friday edition of this column. I have a late flight, so I won't make any promises, but in the meantime I'll be sending out several educational pieces that I think you will enjoy!

Economic Reports and Earnings Events May 18-22

Economic Reports and Events This Week

Monday, May 18, 2009
1:00 p.m. May NAHB Housing Index: Previous: 14.

Tuesday, May 19, 2009
7:45 a.m. ICSC Chain Store Sales Index For May 16:
8:30 a.m. Apr Housing Starts: Previous: -10.8%.
8:55 a.m. Redbook Retail Sales Index For May 16:
5:00 p.m. ABC/Wash Post Consumer Conf For May 16:

Wednesday, May 20, 2009
2:00 p.m.Apr Federal Reserve FOMC Minutes

Thursday, May 21, 2009
8:30 a.m. Initial Jobless Claims For May 16 Week:
10:00 a.m. May Philadelphia Fed Business Index: Previous: -24.4.
10:00 a.m. Apr Conference Board Leading Indicators: Previous: -0.3%.
10:00 a.m. DJ-BTMU Business Barometer For May 9:

Friday, May 22, 2009
No economic events are scheduled for today.



Key Earnings Announcements This Week:

Monday, May 18,
Before: ABMD, ITRN, LOW, PWRD, TNP, VAL
During: -
After: AMCN, APP, HIMX, SCR, VIMC (?)

Tuesday, May 19, 2009
Before: DKS, EJ, HD, JASO, MDT, SKS, SOLF, TJX, VOD
During: -
After: ADI, DY (?), EXM (?), HPW, PVH, NCTY (?)

Wednesday, May 20, 2009
Before: ANN, BJ, BRC (?), CTR, CMCO, DE (?), EV, ESLT, HOKU (?), MPEL, TGT, TWB, UNFI (?), During: -
After: AAP, CTRN, CSC, EEP (?), GYMB, HOTT, INTU, LTD, MDTH (?), NTES, NTAP, PETM, SMTC, SNPS, TTGT (?)

Thursday, May 21, 2009
Before: ACAT (?), BKS, BONT, BRS, PLCE, DHT (?), FREE (?), FRO (?), GME, GIGM (?), HRL, KIRK, MF, NWY (?), PDCO, SOL, ROST, SSI, SMRT, STP, TECD, BKE, TTC
During: -
After: ARO, ALKS (?), ARUN, ADSK, BBOX, BRCD, DDS (?), DITC, DBRN, FL (?), GPS, HIBB, LDK, NDSN, PSUN, PARL, RRGB, SB, CRM (?), SGK (?), SKIL (?), TK (?), VRGY, ZUMZ

Friday, May 22, 2009
Before: CPB, MPR, REDF (?), YGE
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 Bubble Starting to Loose a Little Air

(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! Even though a lot of economic data came out on Friday, the market showed very little reaction to it. The index futures had broken down in the early morning hours following the base off highs in afterhours trade on Thursday. The breakdown confirmed coming out of the 6 am ET correction period. The pace of the selling was as strong as the afternoon selloff of Friday, which, as I said in Friday morning's column, meant that the chances for an upside close into the weekend would be slim. The indices did begin to pull higher into the open after hitting strong support just after 7:00 ET. The upside did not appear to be an immediate reaction, however, to the premarket data and the pace of the selling did not allow the indices to cleanly break the zone of Thursday's highs. The Nasdaq, however, did try!

The Consumer Price Index for April was unchanged, while the core CPI (which does not include food and energy) rose 0.3%. Meanwhile, the Empire State manufacturing survey for May improved from negative 14.1 in April to negative 4.55 in May. This is its highest reading since August 2008. Industrial production fell another 0.5% after March's decline was revised to -1.7%. Shortly after the open the Michigan consumer sentiment index was released. It rose slightly from 65.1 in April to 67.9 in May.

Dow Jones Industrial Average ($DJI)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090518dow.gif

After showing the weakest performance over the past week, the Nasdaq once again took over the lead on the upside on Friday morning. It broke through the opening highs coming out of the 9:45 ET correction period, whereas the S&Ps and Dow held tight in a narrow opening range. It was only after a two-wave correction on a 5 minute time frame into the 10:15 ET correction period that these two indices were able to follow the Nasdaq's lead. At that point the Nasdaq had been consolidating along its intraday highs and busted through through levels into a new high that held at the 10:45 ET correction period. This same time zone held as price resistance for the major indices with previous highs on the S&Ps and the 15 minute 200 sma on the Dow.

The correction periods continued to hold exceptionally well throughout Friday's session. After reversing off 10:45 ET highs, the market pulled into the 5 minute 20 sma support between the 11-11:15 ET correction periods before breaking that support for an increasingly paced selloff into the 12:00 ET correction period. The volume rose slightly into this mid-day reversal zone and price support also hit due to previous 15 minute congestion zones.

S&P 500 ($SPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090518sp.gif

Even though the market became more choppy as the day passed, the correction periods continued to hold and the indices made decent pivot moves off the smaller time frames at these zones at half hour intervals into the closing bell. The market made slightly lower lows throughout the afternoon, but failed to gain momentum to the degree of the late morning decline. A small, yet rapid, drop took place out of 14:30 ET, but the pace only held strongly for about 15 minutes before slowing into the 15:00 ET correction period to pull back up into the middle of the early afternoon congestion.

Nasdaq Composite ($COMPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090518nas.gif

The Dow Jones Industrial Average ($DJI) fell 62.68 points, or 0.0%, to close at 8,268.64 on Friday. For the week on a whole the Dow shed 3.6%. This was its first weekly loss in 3 weeks. On Friday only 6 of the Dow's 30 index components closed with gains. The best performer was Alcoa (AA) with a gain of 3.32%. None of the others posted gains of more than 1%. The next best performer was Microsoft with a gain of 0.8%. The top decliner was Bank of America (BAC) with a loss of 5.66%, followed by a 5.22% loss in General Motors (GM), and a 2.25% loss in Intel (INTC).

The S&P 500 ($SPX) fell 10.19 points, or 1.14%, and closed at 882.88. The S&P 500 lost 5% on the week. This was also its first weekly loss in three weeks and the index is now back into negative territory for the year. Crude oil futures fell to $56.34 a barrel (3.9%) in New York. Energy shares retraced as a result, as did oil companies. Exxon Mobil (XOM) was off 1%, while Chevron (CVX) was down 2%.

The Nasdaq Composite ($COMPX) fell 9.07 points, or 0.54%, and it closed at 1,680.14 on Friday. The Nasdaq fell 3.4% for the week. This brought an end to its astounding rally and marked the first weekly loss for the index in 10 weeks.

This week is going to be a light one on the economic front, as well as the fact that we will be heading into a three day weekend. The market will be closed on Monday for Memorial Day. Not only is earnings season coming to a close (461 of the S&P's 500 companies have already reported), but there are not a lot of economic reports due out either. The main data is going to be in housing. On Monday the May housing market index will be released by the National Association of Home Builders. This will be followed on Tuesday by April's housing starts and building permits. Also of interest will be Wednesday's Federal Reserve minutes from its April policy meeting. A number of retailers are still set to release earnings as well. These include home improvement centers Home Depot (HD) and Lowes (LOW), as well as retailers Ann Taylor (ANN), Target (TGT), the Gap Inc. (GPS). So far 65% of companies to have reported earnings have beat estimates, which were admittedly set rather low. 9% have matched them, while 26% have fallen short.

If the market plans on taking another shot at the highs and a stronger test of upper resistance levels, then it better do so soon! For the moment, I am still favoring a bounce off this zone and a stronger chance to retest the recent highs before giving way to a larger daily and weekly correction. Nevertheless, such a retest would actually increase the odds for an even stronger correction off highs than would typically be the case if the market breaks lower this week instead. The 20 day sma is holding in the S&Ps and Dow, but should it give way early this week then the next daily support on the Dow is approximately 7,900. 1585 and 1520 are the next support levels for the Nasdaq Composite.

S&Ps Bounce Back off 20 Day SMA

(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! Thursday was a rather quiet day for the markets despite quite a bit of news which included the release of the latest initial jobless claims by the Labor Department that said claims rose 32,000 last week, which was greater than expected. The Producer Price Index also came out early Thursday morning and showed a 0.3% increase in April compared to an anticipated 1-1.2% drop. The core PPI, however, fell 0.1% and was in line with expectations. This excludes food and energy prices. In other news, Wal-Mart (WMT) had a difficult session despite posting earnings that were in line with expectations. Another retailers, Nordstrom (JWN) faired better. It released earnings afterhours and beat expectations, leading to a jump higher in afterhours trade. JP Penney (JCP) is due to report its earnings on Friday.

In Wednesday's session the indices had fallen steadily throughout the day with a three day correction underway in the S&Ps and Dow and a 5-6 day one in the Nasdaq. The Nasdaq had broken its 20 day simple period moving average, but by the closing bell it had also hit equal move support on the 30 minute time frame for its continuation move on the downside that began the day before. At this time same the S&Ps and Dow Jones Ind. Ave. were closing in on their 20 day sma support levels. This is a key support zone for trending securities and is the level we need to see hold in order to see any decent retest or slightly higher high in the indices prior to a larger weekly price correction off the current resistance zone.

Dow Jones Industrial Average ($DJI)


In Thursday's session the market tried to do just that and bounced off the 20 day sma, although volume throughout much of the day was on the light side. The indices had been hugging 15 minute 20 sma resistance into the closing bell on Wednesday and broke through this level to trigger a momentum reversal buy on that time frame into Thursday morning. This took the indices firmly above the 15 minute 20 sma into the open. There was not much strength prior to the start of the day, so the indices were just starting to break through their 5 minute 20 smas as well. This provided some initial morning support for the market to work with and it served to hold the morning uptrend well into the early afternoon.

From 10:00 onward the market put in three waves of buying on the 5 minute time frame while holding the 20 sma for support. The third push broke higher out of the 12:00 ET correction period. This took the three indices into their 5 minute 200 period simple moving averages, but the pace of the buying was weaker than earlier in the session. Attempts to push through this resistance merely created very slightly higher highs which served to shift the pace of the buying. This facilitated a rapid flush lower once the 5 minute 20 sma broke coming out of the 13:00 ET correction period.

S&P 500 ($SPX)


Despite the pace of the breakdown, the market didn't get very far. Within 20 minute the indices were again testing support. Earlier price congestion from noon and the 15 minute 20 sma in the Dow helped the market hold lows at 13:30 ET. It would have been easier for the market to have remained weak if the volume had picked up on the selling, but the fact that it remained the lightest of the day meant that the bears were not very convinced that the indices would indeed continue lower. Instead the market went for a fourth push higher. This completed a rather typical form of trend development whereby when the correction following three waves of buying takes about twice, but no longer than twice, as long as the corrections between each wave of buying, and then breaks higher for a fourth move, then that fourth move completes the trend. A larger price correction almost always follows that leads to a lower low.

That correction came on Thursday after the S&P finally retested Wednesday's highs. The market pulled back to the 5 minute 20 sma into 15:00 ET, but it didn't even base there long enough for a typical Avalanche™ before breaking through the support into the final 30 minutes of trade.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 46.43 points, or 0.56%, to close at 8,331.32 on Thursday. The top gainers included J.P. Morgan & Chase (JPM) (+4.4%), Citigroup (C) (+4.1%), and Bank of America (BAC) (+2.7%).

The S&P 500 ($SPX) rose 9 points, or 1%, and closed at 893. Crude oil futures rose once again to $58.62 a barrel in New York.

The Nasdaq Composite ($COMPX) rose 25.02 points, or 1.5%, and it closed at 1,689 on Thursday.

Even though the market has a decent chance of holding the 20 day sma into the weekend, the pace of the market action has not shifted enough to allow the indices to easily sustain a strong rally and this makes me rather cautious on the bullish side at the moment. The futures are actually congesting with a weak outlook into the early morning hours in premarket trade, so we will need to see the pace of a breakdown from this range be more gradual than the drop into it in order to see more upside into the weekend.

Disappointing Data Weighs on Market

Disappointing Data Weighs on Market

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

Good day! The market was not pleased with the latest economic data released early on Wednesday morning. At 8:30 am ET the latest retail sales data was released. Retail sales fell 0.4% in April. Economists had expected an increase of 0.5%. Excluding autos, retail sales fell 0.5%. At 10:00 am ET the Commerce Department announced that business inventories fell 1%. This was in line with expectations, but its the 7th straight month whereby they have fallen.

In all fairness, the market was looking weak long before the morning data, which merely pushed the indices even further on the downside. After failing to break higher in the early morning hours, the index futures fell back out of the 2:00 am ET correction period. This shifted the pace in favor of the bears and the market confirmed that bias with a break lower once again out of the 5:00 am ET correction period. By the time the 8:30 am ET retail data came out, the futures were already closing in on Tuesday's mid-day lows. They congested at that zone into the data announcement and then broke through them on the news and into the opening bell.

Dow Jones Industrial Average ($DJI)


The market's initial intraday support hit at the 9:45 ET correction period and the market pulled slightly higher into the 10:00 data. The Nasdaq flushed to new lows on the news, but the S&Ps and Dow held and the indices were soon pulling gradually higher once again. The 5 minute 20 sma acted as strong resistance for the downtrend and the market turned lower once again.

Morning lows held with the 11:00 ET correction period in the S&Ps and Dow, but the Nasdaq again hit new intraday lows. This time the pace shifted at those lows, however, and an attempt was made at a 5 minute momentum reversal. It was not enough of a change in pace on the 15 minute to break the 5 minute 20 sma resistance, but it did start the beginning of that slowdown. The market congested into the early afternoon before falling out of 12:30.

S&P 500 ($SPX)


Due to the extreme drop into the morning, each time the indices attempted new lows throughout the session they failed to break by any strong degree. In fact, the S&Ps and Dow only managed one real break lower in the early afternoon following only a very slightly lower low around 11:45 ET. They held the 13:30 ET lows and traded in a choppy range throughout the remainder of the session. The Nasdaq also became much more choppy following 13:30 ET, but still made a new low within the chop following the 14:00 ET correction period.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 184.22 points, or 2.18%, to close at 8,284.89 on Wednesday. The Dow is down 3.2% on the week so far. Only 6 of the Dow's 30 index components closed in positive territory. The top gainer was General Motors (GM) with a gain of 5.22%. Merck (MRK) followed with a gain of 2.76%. Pfizer (PFE) rose 2.28%. Bank of America (BAC) was the hardest hit with a double digit loss of 10.20%, followed by an 8.77% decline in Alcoa (AA), and a 6.83% drop in Citigroup (C).

The S&P 500 ($SPX) fell 24.43 points, or 2.69%, and closed at 883.92. The S&Ps are down 4.6% so far this week. Crude oil futures fell 83 cents to $58.02 a barrel in New York.

The Nasdaq Composite ($COMPX) fell 51.73 points, or 3.01%, and it closed at 1,664.19 on Wednesday. The Nasdaq is down 3.8% so far this week and has now busted through it 20 day simple moving average.

Wal-Mart (WMT) and Nordstrom (JWN) are due to report earnings on Thursday, while JP Penney (JCP) follows on Friday. As long as the S&Ps and Dow can still hold on above the 20 day smas, then the market still has a decent chance of testing the 200 day simple moving average zones more strongly. Once a correction confirms, however, the market can easily see at least several weeks to a month of pullback action on the larger time frames. With earnings season winding down, the risk of this continues to rise.

Market Holds Daily Support

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


Good day! The market spent most of Monday's session in a trading range, particularly in the S&Ps and Dow Jones Ind. Ave., which based along lows after a strong gap lower. This range had begun to break into Monday's closing bell and the breakdown continued to follow through well into Tuesday's session.

The downside pace was very strong out of the open. The indices attempted to hold initial support between 10:15 ET and 10:45 ET. This was the zone of Thursday's low in the Nasdaq and the 15 minute 200 simple moving average zone in the S&Ps and Dow. The pace of the selling slowed into this zone, but the indices failed to push through the 5 minute 20 sma and instead the bounce resulted in the formation of a two-wave continuation short pattern out of 11:15 ET.

Dow Jones Industrial Average ($DJI)


The selling pace picked up again when the price support broke coming out of the 12:00 ET correction period. The Nasdaq selloff continued into equal move support on the 30 minute time frame, while the S&Ps and Dow also hit similar support when adjusted for the slower pace of the overall selloff into the second half of the morning. These levels hit at about 12:15 ET with a retest into 13:00 ET to slow the pace of the selling once again on the 5 minute time frame.

This retest of the lows and slightly lower low in the S&Ps created a reversal pattern coming out of the 13:00 ET correction period. This is a very typical time of the day for major reversals to occur intraday off highs or lows on a 15 minute time frame. The indices gradually increased in pace throughout most of the afternoon, particularly in the S&Ps and Dow. The momentum picked up the most out of 14:30 ET with the 5 minute 20 sma acting as support leading into the strongest upside action of the day.

S&P 500 ($SPX)


The Dow surged to new intraday highs on Tuesday afternoon before hitting price resistance from Friday's opening price zone. Meanwhile, the S&Ps found resistance at the 200 sma on the 5 minute time frame and the middle of Monday's trading range. The Nasdaq was weaker, but it also managed to return to its 5 minute 200 sma. In this case, however, it was only a 50% recovery of the losses incurred since Monday's highs. All three indices held these strong resistance levels into the closing bell and then proceeded to fall into an extended trading range afterhours.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 50.34 points, or 0.6%, to close at 8,469.11 on Tuesday. Just over half of the Dow's 30 index components closed in positive territory. The top gainer was Pfizer (PFE) with a gain of 5.51%. It was followed by a 3.86% gain in Coca Cola (KO). The biggest loser was General Motors (GM). It was hit hard by expectations that it will be filing for bankruptcy next month and fell a whopping 20.14% in Tuesday's session.

The S&P 500 ($SPX) fell 0.89 point, or 0.1%, and closed at 908.35 on Tuesday. Crude oil futures closed higher by 35 cents at $58.85 a barrel in New York. It had briefly tested $60 earlier in the session. Oil shares moved in sync with a gain of 2.2% in Exxon Mobil (XOM) and a 1.8% gain in Chevron (CVX).

The Nasdaq Composite ($COMPX) fell 15.32 points, or 0.88%, and it closed at 1,715.92 on Tuesday. Many of the Nasdaq's key components struggled throughout the day with the largest losses in the first half of the session. Apple (AAPL) fell 4%, while Qualcomm (QCOM) shed 2.4% and Google (GOOG) lost 2%. Intel (INTC) offered some positive news afterhours that pushed share prices higher. INTC's CEO offered an informal better-than-expected outlook for the second quarter.

A number of top retailers will be posting earnings throughout the remainder of the week. These include Macy's (M) on Wednesday, Wal-Mart (WMT) and Nordstrom (JWN) on Thursday, and JP Penney (JCP) on Friday. The 10 day sma has hit on both the S&P 500 and Dow Jones Industrial Average and the 20 day sma has hit on the Nasdaq. The way that these levels have been tested suggests that the market still has that potential to push one more time into larger daily resistance in the S&Ps and Dow at or just above the 200 day simple moving averages in the S&Ps and Dow.

Financials Weigh Heavily on Overall Market

Financials Weigh Heavily on Overall Market

(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 financials were not very happy on Monday with news of three banks planning to issue new common shares as part of their strategy for paying back government assistance. The Select Sector SPDR-Financial ETF (XLF) was down 5.8% on the day and this created a strong divergence between the S&P 500 and Dow Jones Industrial Averages versus the stronger, tech-heavy Nasdaq Composite.

Dow Jones Industrial Average ($DJI)


It was clear that things were going to be a bit different in the market on Monday early on. Although all three of the major indices opened lower and continued lower in the first 15 minutes of the day before pivoting off support following the 9:45 ET correction period, it was the Nasdaq that emerged as the relative strength leader once again. The index surged higher to rapidly closed the morning gap, while the S&P 500 and Dow Jones Ind. Ave. had trouble breaking just their morning highs. The S&Ps managed to do so, albeit only slightly, into the 11:15 ET correction period, but the Dow held fast and refused to budge at that resistance level. Even for the S&Ps, however, it was not much of a victory. A series of three highs into that morning high on a 5 minute time frame merely created a momentum reversal for a short trigger just prior to 11:30 ET. Both the S&Ps and Dow succumbed to its pressure.

This Nasdaq not only closed its morning gap, but it push all the way past the previous afternoon highs at the 15 minute 200 period simple moving average before it stalled on Monday morning. These resistance levels hit at approximately the same time as the 10:15 ET correction period. While the S&Ps and Dow were retesting morning highs, the Nasdaq fell into a trading range with a slightly lower high into 11:15 ET. This created a 2-wave correction to trigger a continuation pattern on the upside off the 15 minute 20 sma out of the 12:00 ET correction period. Since the rally was more extended than usual, the Nasdaq still needed a little longer to correction and the index fell into a trading range before breaking higher once again at 13:00 ET.

S&P 500 ($SPX)


While the Nasdaq based, the S&Ps and Dow narrowly missed retesting their morning lows. In the end the base in the Nasdaq was still not long enough into even 13:00 to allow for a strong upside breakout, however, and the S&Ps and Dow held 15 minute 20 sma resistance with another turn lower into 14:00 ET. The Nasdaq followed along and the three indices congested into 15:00 ET before triggering a breakdown in the final hour of trade that continued to take the markets lower in afterhours activity.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 155.88 points, or 1.8%, to close at 8,418.77 on Monday. Only 5 of the Dow's 30 index components closed in positive territory. The top gainer was IBM up 1.39%. It was followed by Hewlett-Packard up 1.01%, Wal-Market (WMT) up 0.98%, and Intel (INTC) up 0.52%. General Motors (GM) was the greatest loser, down 10.56%. It was followed by an 8.68% loss on Bank of America (BAC), an 8.31% loss in American Express (AXP), and a 7.99% loss in J.P. Morgan & Chase (JPM).

The S&P 500 ($SPX) 19.99 points, or 2.15%, and closed at 909.24 on Monday. Energy stocks were mainly lower today, even though crude oil futures closed relatively unchanged, down $0.13 a barrel, at $58.50. Crude oil is up 31.17% year-to-date.

The Nasdaq Composite ($COMPX) fell 7.76 points, or 0.45%, and it closed at 1,731.24 on Monday. It spent most of the session in positive territory thanks to strong gains in tech stocks.

Top retailers will be posting earnings this week as earnings season winds down. These include Macy's (M) on Wednesday, Wal-Mart (WMT) and Nordstrom (JWN) on Thursday, and JP Penney (JCP) on Friday. The 20 day sma will remain support in the indices, while the 200 day sma will serve as resistance for the S&Ps and Dow. Slightly above this 200 day sma is a stronger resistance level, however, so a test of the 200 sma on stronger-than-average momentum can easily push the market slightly higher.

Market Repeats Wednesday's Action

(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! After leading the bulls for so long, the Nasdaq has had a difficult time holding onto the position as the leading index over the past several days. All three of the major indices gapped higher into Friday's opening bell following the release of the government's stress tests on the top financial institutions. Early data on Friday gave the market another boost when the government reported a job loss of 539,000 jobs last month. This was fewer than had been expected. The unemployment rate still stands at its highest level in 26 years, rising from 8.5% to 8.9%. Nevertheless, economists had expected it to hit 9%.

Dow Jones Industrial Average ($DJI)


The Fibonacci retracement levels played a strong roll in the index futures when the regular session began. Both the S&P 500 and Dow Jones Ind. Ave. E-Minis opened at nearly their exact 62% retracement levels which served as initial support in the morning since they were pulling down off premarket highs into them. Meanwhile, the Nasdaq opened at the 38% zone and, although it didn't hold it exactly to begin with, it rallied out of the open to hit its 62% retracement level as resistance within the first 20 minutes of the day. It held this resistance level perfectly and when it did so all of the major indices turned. The Nasdaq, which remained the weakest, quickly fell back into the zone of Thursday's lows as the next support zone, while the S&Ps and Dow fell back into their 5 minute 20 sma support levels into 10:30 ET.

This morning action in the indices was very similar to Wednesday's trade. On Wednesday the market had also opened higher and then fell throughout the middle of the morning to close a large portion of the overall gaps. Support held at about 10:30 ET and the indices again reversed direction, albeit at a more gradual overall pace. After an initial push upwards on a 5 minute time frame, the market fell into a level of congestion. By hugging the 5 minute 20 sma, a Phoenix™ buy formation was created. Light volume confirmed the upside bias as the market congested into 11:30 ET before popping higher into noon.

S&P 500 ($SPX)


Not only was the morning action very similar to Wednesday's session, but the remainder of the day played out in much the same manner as well. The stronger S&P 500 and Dow found resistance at the zone of the morning highs heading into 12:30 ET, while the weaker Nasdaq retraced a large chunk of the morning losses, but failed to push past the 62% Fibonacci retracement level that had held it in on Wednesday.

When the market pulled back off highs early in the afternoon the 15 minute 20 sma served as strong support once again. The pace of that pullback slowed into the 14:00 ET correction period and another push higher began. This was a little later in the day than on Wednesday, but the result was the same. The S&Ps and Dow pushed to slightly higher highs intraday, while the Nasdaq failed to hit its morning highs before pulling back. At this point the market was about 30 minutes behind Wednesday's late afternoon pivot off highs, but the market once again held the 15 minute 20 sma support on the pullback.

The slower turn did not allow it to pop back up in the final 30 minutes of trade before turning back lower, but the S&P and Dow futures managed a slight recovery before afterhours trade came to a close. The afterhours action also continued to follow along in the same manner as mid-week with the futures pulling lower on Sunday just as they had into midnight on Wednesday. The extent of Sunday's correction was stronger than earlier the previous week, but midnight support again held.

Given that the lead into Wednesday's action was much stronger than even the rally into Friday was on the afterhours time frame, we should expect the pace to continue to shift on the all sessions charts to a point whereby the market breaks from the pattern set of Wednesday's moves. This will most likely result in weaker upside into Monday morning or even the failure to follow through on the next leg of action that had been a steady premarket rally into Thursday morning.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 164.80 points, or 2.0%, to close at 8,574.65 on Friday. 24 of the Dow's 30 index components closed higher on Friday. J.P. Morgan & Chase (JPM) was the leader, rising 10.5%. It was followed by a 9.36% gain in American Express (AXP). Intel (INTC) was the top decliner with a loss of 3.04%. The financials were the clear market leaders. The Select Sector SPDR-Financial (XLF) posted a gain of 7.4% on the session. The Dow overall closed higher by 4.4% on the week.

The S&P 500 ($SPX) rose 21.84 points, or 2.4%, and closed at 929.23 on Friday. 403 of the S&P 500's stocks were higher on the day. It was up 5.9% on the week as a whole. Crude oil futures closed at $58.63 a barrel in New York, up $1.92, or 3.4%, from Thursday. Aided by this boost in oil prices, Schlumberger (SLB) rose 4.5%, while Exxon Mobil (XOM) closed higher by 2.7%. Natural gas was up 21 this past week, while gasoline prices rose 5%.

The Nasdaq Composite ($COMPX) rose 22.76 points, or 1.3%, and it closed at 1,739.00 on Friday. Compared to the other two major indices the Nasdaq was up only slightly on the week with a gain of 1.2% thanks to Friday's modest advance. Nevertheless, it was its 9th weekly gain in a row and remains the strongest of the three so far this year.

Although earnings season is lightening up, next week brings with it data from top retailers such as Macy's (M) on Wednesday, Wal-Mart (WMT) and Nordstrom (JWN) on Thursday, and JP Penney (JCP) on Friday.

With fewer and fewer earnings coming up, the market will have an even greater chance at a larger daily correction as it runs out of positive earnings surprises. The S&Ps are very close to the year's highs, which we've been following over this past week as the next major resistance zone. The 200 day sma is also just overhead. As in recent weeks, however, I am not being overly eager to trade new swingtrades at the moment. Instead I'm sticking to the shorter term intraday action. I think that we will continue to see attempts at further upside interrupted by stronger momentum moves lower intraday until this channel finally breaks with that larger daily and weekly correction. I am not expecting more than a week more at most before this uptrend breaks on a daily time frame.

Economic Reports and Earnings Events May 11-15

Economic Reports and Events This Week

Monday, May 11, 2009
No economic events are scheduled for today.

Tuesday, May 12, 2009
7:45 a.m. ICSC Chain Store Sales Index For May 9:
8:30 a.m. Mar Trade Balance: Previous: -$25.97B.
8:55 a.m. Redbook Retail Sales Index For May 9:
2:00 p.m. Mar Federal Budget Balance: Previous: -$192.27B.
5:00 p.m. ABC/Wash Post Consumer Conf For May 9:

Wednesday, May 13, 2009
8:30 a.m. Apr Import Prices: Previous: +0.5%.
8:30 a.m. Apr Retail Sales: Previous: -1.1%.
8:30 a.m. Apr Retail Sales, ex-autos: Previous: -0.9%.
10:00 a.m. Mar Business Inventories: Previous: -1.3%.

Thursday, May 14, 2009
8:30 a.m. Initial Jobless Claims For May 9 Week:
8:30 a.m. Mar Producer Price Index: Previous: -1.2%.
8:30 a.m. Mar Producer Price Index,ex-food & energy: Previous: 0%.
10:00 a.m. DJ-BTMU Business Barometer For May 2:

Friday, May 15, 2009
8:30 a.m. Apr Consumer Price Index: Previous: -0.1%.
8:30 a.m. Mar Consumer Price Index, ex-food energy: Previous: +0.2%.
8:30 a.m. Apr Empire State Fed Manufacturing Survey: Previous: -14.65.
9:00 a.m. Feb Tsy International Capital: Previous: -$148.9B.
9:15 a.m. Mar Industrial Production: Previous: -1.5%.
9:15 a.m. Mar Capacity Utiliztion: Previous: 69.3%.
10:00 a.m. Mid-May Reuters/U Mich Sentiment Index: Previous: 61.9.

Key Earnings Announcements This Week:

Monday, May 11,
Before: ALD, ABK, AOB, BPZ, CRZO, CFSG, CCO, DISH, SATS, ENER, ENG, FNM, FRPT, FSIN, GSI, GLG, GTXI, HI, HWCC, NSIT (?), IPCS, KG, MCCC, NTE, ORA, PCAP, PETS, PLA, RRI, ROSE, SLW, SUG, STRL, SWSI, VM, WCRX, WCG
During: -
After: JOBS, ARNA, CPE, CHINA, CTRP, DTSI, FLR, GXP, HPT, IPAR, KNXA, LDK (?), ME, MAXY, MDR, MR, NNI, NUAN, PEC, QSFT, RAX, SB (?), SGK (?), SIMO, STEC, TTEC, TWTC, VIMC (?), ZOLT (?)

Tuesday, May 12, 2009
Before: ACMR (?), ALLT, BPHX, FOSL, GIGM (?), JRT (?), MBI, CHUX, OHB (?), WRC, YTEC
During: -
After: AMAT, AUTH, BMC, STV, ESIO, SOLR, LTRE, NCMI, PAAS, WES, XFML (?)

Wednesday, May 13, 2009
Before: CSIQ (?), DPS, HELE, HOKU (?), IGLD (?), JASO (?), LIZ (?), M (?), MFB, ORCT, TDW, VIP
During: -
After: ACXM, ANW, APP (?), ASEI, CA, CLWR, CVLT, CPII, JACK (?), KONG, MDTH (?), MIDD (?), OPNT, RUBO (?), SPTN, SXE, TTGT (?), URS, VSAT (?), WFMI

Thursday, May 14, 2009
Before: ADES, FEED (?), AMSC, ACAT (?), CXR (?), DHT (?), FSRV (?), FREE (?), FUQI (?), GIL, GAP (?), IAG, LEA, LPHI (?), MPEL (?), PBH, PGNX (?), SOL (?), RTLX, SFL, SNE (?), GASS, ELOS, URBN, WMT, YGE (?)
During: -
After: AES (?), A, AMX (?), BBI, CPWR, DAR (?), EXAR, ICXT, KSS, NINE, JWN, RRGB (?), SINA (?), VVUS (?)

Friday, May 15, 2009
Before: ANF (?), GOL (?), JCP, LABL
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.

Exhaustion Gap Halts Market Advance

Exhaustion Gap Halts Market Advance

(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! After climbing steadily throughout premarket trade, the indices turned sharply lower into the opening bell with the upside gap serving as an exhaustion gap following several weeks of steady, yet choppy gains in the market. As I mentioned in yesterday's column, a primary danger with such upside for the bulls is that when selling hits it can be very swift and easily wipe out a large portion of those gains. This is precisely what happened on Thursday.

Dow Jones Industrial Average ($DJI)


When the market took a turn lower early in the day on Thursday, the pace of that selloff was much stronger than the typical recent decline. The Nasdaq had attempted such a move the previous morning, but failed to sustain it. The market had no regrets on Thursday morning, however, and the pace of the selloff remained fairly steady until approximately 10:30 am ET. At this point the Dow hit its 5 minute 200 period simple moving average and the market bounced briefly before falling to a slightly lower low intraday into the 11:15 ET correction period.

The creation of a slightly lower low on a slightly more gradual pace on the push lower into 11:15 ET created a 2B reversal pattern off the lows. The larger pace on the downside was still too strong to allow that 2B to get very far off the ground, however, and the move was only strong enough to push the indices into a correction primarily through time mid-day. A two-wave correction formed coming off the lows. At first the move stalled at the 5 minute 20 sma, then it broke higher for a second wave up on the 5 minute charts. Volume declined during this period and the overall pace led to a trading range into the 15 minute 20 period sma. The two-wave pattern triggered for a continuation on the downside out of the 13:00 ET correction period with volume spiking to confirm the breakdown.

S&P 500 ($SPX)


The move lower on Thursday morning was still too extreme to allow the market to continue so quickly into the afternoon. A longer base would have been ideal for another strong continuation. The indices still easily moved into lower lows intraday, but from 13:45 ET into 15:30 ET the market formed a momentum reversal pattern by creating a series of three lows with each slightly lower than the last. The momentum reversal triggered in the final minutes of trade, but the setup followed through afterhours with three waves of upside on the 5 minute time frame into 18:00 ET and the S&P 500's 5 minute 200 sma on the all sessions time frame in the futures. The weaker Nasdaq only managed to retrace into its 38% Fibonacci retracement level before falling range-bound again, but the Dow and S&P futures recovered half the day's losses well before midnight.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 102.43 points, or 1.2%, to close at 8,409.85 to take back Wednesday's gains. Despite the loss, nearly 1/3 of the Dow's 30 index components posted gains. The strongest was Bank of America (BAC), which closed higher by 6.46%. Merck (MRK) was the second strongest amongst the Dow. It rose 2.44%, followed by a 2.12% gain in General Electric (GE). The losers were led by Alcoa (A), which fell 6.19%, and J.P. Morgan & Chase (JPM), which fell 5.32%. Caterpillar (CAT) was the third largest loser in the Dow, falling 5.20%.

The S&P 500 ($SPX) fell 12.14 points, or 1.3%, and closed at 907.39 on Thursday. Crude oil futures closed at $56.71 a barrel in New York, up $0.37 from Wednesday.

The Nasdaq Composite ($COMPX) fell 42.86 points, or 2.44%, and it closed at 1,716.24 on Thursday.

The major news on Thursday dealt with the government's bank stress tests. Out of the country's 19 largest financial institutions, 10 are said to need to raise more capital to the tune of nearly $75 billion. Stress test results concluded that BAC will still need approximately $33.9 billion. This was by far the one with the greatest need. Wells Fargo (WFC) followed with a need for $13.7 billion. American Express (AXP), Goldman Sachs (GS), and JPMorgan (JPM) were among those that were not deemed to be in need of additional capital.

The 20 day sma will continue to serve as the primary support level for the indices. Until this breaks, the market still has room to hit the year's highs in the S&Ps and Dow. Due to the current pace of the selling on the 60 minute time frame, however, the market cannot easily surge into those larger resistance levels.

Market Continues to Push Higher

(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 S&Ps and Dow Jones Ind. Ave. faired well throughout the most of the session on Wednesday. All three of the major indices did very well heading into the open following the 8:15 am ET release of the ADP National Employment Report. Private sector employment fell 491,000 in April. This was less than economists had anticipated. Additionally, the March data was revised lower from 742,000 to 708,000.

The news shot the index futures higher, but the market couldn't hold onto the gains following the open. The index futures rolled over off premarket highs. Even though the indices attempted to stabilize at the 9:45 ET correction period, the market fell sharply lower again at 10:00 am ET. The Nasdaq had the strongest downside, filling its opening gap and falling into Tuesday's lows. During the same time the S&Ps and Dow closed their opening gap zone.

Dow Jones Industrial Average ($DJI)


The acceleration on the morning's gap closure made it very difficult for the market to bounce quickly off support when the gap zone filled at approximately 10:30 am ET and the Nasdaq hit prior 15 minute highs and lows for price support. In order to rally quickly off those lows, the market would need to have rounded off at the support with slightly lower lows. Since the lows held without slightly lower lows and shifting downside pace, the upside off the support was substantially slower than the descent. The market chopped higher, making new positions in the indices on smaller intraday time frames more difficult for daytraders.

The morning bounce hit initial resistance with the 11:00-11:15 ET correction periods when the three major indices rose into their 5 minute 20 period simple moving averages. This could easily have led to another test of the lows or even a slightly lower low to round off the pace of the larger selloff. Instead, only the Dow retested morning lows and the S&Ps and Nasdaq established higher lows just prior to 11:30 ET.

S&P 500 ($SPX)


By continuing to trade just under the 5 minute 20 sma, the market formed a sloppy Phoenix™ buy setup on the 5 minute charts. The congestion along that 20 sma only had one major low within it, however, making it a much higher risk setup for those taking it merely on a break of that 5 minute 20 sma. A break out of the congestion into the 12:00 ET correction period lowered this risk and served as a more favorable trigger without the higher potential for a bull trap and continuation to a lower low into the early afternoon.

The market retraced a large expanse of the morning decline before finally correcting on a 15 minute time frame into 12:30 ET. The initial pop out of 12:00 ET slowed with a momentum shift into 12:30 to create a 5 minute short setup. The turn lower held the 15 minute 20 sma in the S&Ps and Dow and price support at Tuesday's lows in the Nasdaq before heading higher once again.

This time around the market was stronger as it broke the downtrend channel into the 14:00 ET correction period. The Dow was able to make its way back to the morning highs. This level served as price resistance. The S&P were stronger and broke to new intraday highs, while the Nasdaq only managed to return to the 10:00 breakdown level. Once this hit, the remainder of the afternoon was again on the choppy side. The indices pulled back into the 15 minute 20 sma support and then bounced one final time into the close. Both the S&Ps and Dow ended the session at the day's highs.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 101.63 points, or 1.2%, to close at 8,512.28 on Wednesday. The financial stocks posted strong gains on a relief rally that many of the top companies would not need to raise additional capital. Bank of America (BAC) rose 17.07%, followed by a 16.62% gain in Citigroup (C), and a 6.89% gain in J.P. Morgan & Chase (JPM). Disney (DIS) also did extremely well on Wednesday with a gain of 11.75%. The worst performer was General Motors (GM). It fell 10.27% on talks of selling its Saturn division, as well as its Opel business in Germany.

The S&P 500 ($SPX) rose 15.73 points, or 1.7%, and closed at 919.53 on Wednesday. Crude oil futures closed at their highest level since Nov. 14, 2008 at $56.34 a barrel in New York.

The Nasdaq Composite ($COMPX) rose 4.98 points, or 0.3%, and it closed at 1,759.10. This was the best close for the Nasdaq since Nov. 4, 2008. Cisco (CSCO) reported earnings of 30 cents a share in its fiscal fourth quarter. It was up about 5% initially, but it ended the session down 0.1%.

Volume was stronger in Wednesday's session to help confirm the upside breakout, although overall it remains light for the week. There is still now potential for an equal move level on the daily time frame as shown on the Dow. Because the market is inching higher in a 60 minute trend channel though, the indices can flush quickly lower on that time frame when the lower end of the channel from the past two weeks breaks. Support would again be the 20 day sma.

Market Makes a Run for It

(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! Bolstered by stronger-than-expected economic data on Monday, the market broke higher after threatening yet another pullback off the upper end of the trend channel that has been in place since the end of March. Despite anticipating another month of declines to the tune of -1-1.5%, the government announced that construction spending rose 0.3% in March. This went along with a report by the National Association of Realtors that pending home sales rose 3.2% in March. Economists had anticipated an increase of 0.4-0.6%. Year-over-year pending home sales are up 1.1%. Homebuilders were obviously excited by the news, as were steel companies. The Philadelphia Housing Sector ($HGX.X) climbed 7.5%.

Dow Jones Industrial Average ($DJI)


The indices were up strongly in premarket trade heading into Monday morning, but despite a decent upside breakout around 3:00 am ET, the pace was not yet strong enough to sustain an equal move rally on the all sessions time frame as compared to the run into the end of Friday's session. After three moderate pushes higher on a 5 minute time frame following the morning breakout the market formed another three waves back into Sunday's congestion zone in the index futures.

Although still higher into Monday's open, the index futures had pulled back into enough support on the trend exhaustion to create a strong buy setup to accompany the morning's economic data into the opening bell. The initial rally gained momentum very strongly out of 10:00 ET when the bulk of the economic news hit the wires and this propelled the indices higher into that equal move territory and target zone on the all sessions time frames.

S&P 500 ($SPX)


By 10:30 the market had already begun to pull lower off the highs, but the pace did not shift strong enough nor long enough at the mid-morning highs to allow for a strong correction in price. Instead the market held onto the resistance and fell into a trading range. The indices attempted to push the rally even further out of the 11:00 am ET correction period, but didn't get far. A larger correction soon formed on the 15 minute time frame whereby the market fell into an extended trading range along the intraday highs nearly into the closing bell. On the 15 minute charts a clear two-wave correction takes place within the range. This is the most easy to see in the Nasdaq with the 15 minute 20 sma acting as support.

The news extended the market so far on the upside on Monday morning that the remainder of the session was much more difficult. The indices traded in a narrow range with a high degree of overlap in price from one bar to the next on the 5 and 15 minute time frames. Even the late-day breakout in the final 10 minutes of trading coming off the lows of the 15:30 ET correction period didn't get too far immediately afterhours. Instead the action was similar to the premarket trade when the futures broke higher at about 3:00 am Et on Monday. The market pulled back off afterhours highs when the pace shifted on the rally and it formed two waves of correction back into the middle of the trading range before pulling higher out of the 4:00 am ET correction period.

Nasdaq Composite ($COMPX)


The S&P 500 ($SPX) rose 29.72 points, or 3.4%, and closed at 907.24 on Monday. It's finally back in positive territory for the year, albeit only slightly with a gain of 0.4% on the year to date. Gas prices have jumped this week with crude oil on the rise. Crude was up $1.27 a barrel on Monday to close at $54.47 in New York. The move also took energy shares higher.

The Nasdaq Composite ($COMPX) rose 44.36 points, or 2.6%, and it closed at 1,763.56. The index is up 11.8% on the year. Tech stocks were moving on upgrades in Intel (INTC) and Research in Motion (RIMM).

The Dow Jones Industrial Average ($DJI) rose 214.33 points, or 2.6%, to close at 8,426.74 on Monday. The index is still down 4% on the year. Banking shares took off on Monday though with a gain of 19.3% in Bank of America (BAC).

The breakout on Monday has set the tone for the action I talked about earlier last week. Even though the pace of the market suggested to keep watching for a reversal trigger, additional cons on the pattern for such a reversal kept a breakout higher as a stronger possibility than usual. This opens the door for the move out of the slower trend range to now have the potential of hitting an equal move on the daily time frame. The light volume still concerns, however, since such as typically sees an increase in volume and not a decrease. A confirmation of the breakout will mean that the market will not have major resistance again until the year's highs are tested in S&Ps and Dow. The 911 zone in the S&Ps EMinis (ES) and 8470ish on the Mini-Dow futures (YM) will serve as closer, short-term resistance.



Note: I will be out of town tomorrow, so I will be sending out a special educational edition on identifying and utilizing Fibonacci support and resistance levels in your trading instead of the typical Daily Market Action Letter, which will return on Wednesday evening.

Market Hesitates

Market Hesitates

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

Good day! The market was once again all over the place in Friday's session. Volume was very light throughout the day as the indices struggled to hold onto weekly gains. Early morning economic data pointed towards an improvement in consumer sentiment according to the Reuters/University of Michigan survey, which rose from 57.3 in March to 65.1 in April. 62 had been anticipated. Manufacturing also showed improvement. The Institute for Supply Management survey rose from 36.3 in March to 40.1 in April. It is still under 50, however, which indicates contraction. Factory orders for durable goods fell 0.9% in March, followed a gain of 0.7% in February. The drop was greater than was anticipated.

Dow Jones Industrial Average ($DJI)


The market was trading lower out of the opening bell on Monday, but then bounced slightly until the 10:00 ET data came out. This pushed the indices to new intraday lows heading into the next correction period at 10:15 ET. This resulted in a slightly lower low intraday for the formation of a 2B reversal pattern on not only a 5 minute time frame, but it also marked a slightly lower low on the 15 minute time frame. This was the second lower low and the third one total since the market turned lower at the end of Thursday.

This meant that the indices were not only triggering reversal patterns intraday out of the 10:15 ET correction period, but that the momentum or pace was shifting within the securities. Even when lower lows are made on strong momentum on one time frame, such as the 5 minute time frame on Friday morning, there can still be a shift within on a trend channel itself. This is shown in green on the 15 minute time frames.

S&P 500 ($SPX)


The larger 15 minute momentum shift and intraday 2B led the market higher throughout the middle of the morning. Resistance hit at the prior afternoon's 5 minute highs. The afternoon action then became more choppy. The market traded in a range along the 15 minute 20 period simple moving average throughout mid-day, creating a 15 minute Phoenix™ that triggered out of the 13:00 ET correction period. The smaller time frames would have been more difficult to time, however, as a result of the more choppy action that had the market stepping higher into the 13:00 ET breakout instead of pulling gradually lower off a second or third high within the mid-day range.

Nevertheless, the market followed through on the early afternoon break higher with a lot of precision. The S&P hit and held the equal move target on the breakout almost perfectly and the Nasdaq came in extremely close as well. The market then reversed course before 14:00 ET and continued lower into the final 30 minutes of trade. The action didn't offer very decent smaller time frames setups, but 15 minute support and resistance continued to hold well into the closing bell.

Nasdaq Composite ($COMPX)


The S&P 500 ($SPX) rose 4.71 point, or 0.5%, and closed at 877.52. The index rose 1.3% for the week with energy shares among the strongest on Friday. Crude oil futures rose from $52.24 a barrel to $53.20 a barrel, but still can't shake the $50/barrel zone it's been trading at for weeks.

The Nasdaq Composite ($COMPX) rose 1.90 points, or 0.1%, and it closed at 1,719.20. The index rose 1.5% for the week.

The Dow Jones Industrial Average ($DJI) rose 44.20 points, or 0.5%, to close at 8,212.41 on Friday. The top gainer in the index on Friday was Alcoa (AA), which closed higher by 6.84%. It was followed by a 4.72% gain in Caterpillar (CAT). General Motors (GM) was the top loser, giving in to the continued pressure on automakers. It fell 5.73% on Friday. Chrysler Group filed for Chapter 11 bankruptcy protection a day earlier and both Ford (F) and Toyota (TM) announced very bleak vehicle sales numbers for April.

The Dow rose 1.7% for the week. The market was down only slightly the previous week with this past week's gains taking the indices higher once more for the seventh weekly gain in the past eight weeks. The Dow is now up about 25% off March's lows, but light volume at the recent highs continues to cause concern for the bulls. Typically a volume drop such as this will be followed by corrective action, so my bias hasn't really changed much at all over the past several weeks. I remain much more cautious on the long side for anything above a daytrading time frame and continue to watch for smaller time frame momentum shifts to signal stronger corrective power off the recent highs.

Economic Reports and Earnings Events May 4-8

Economic Reports and Events This Week

Monday, May 4, 2009
10:00 a.m. March Construction Spending: Expected: -1.3%. Previous: -0.9%.
10:00 a.m. March Pending Home Sales: Expected: -1.3%. Previous: +2.1%.

Tuesday, May 5, 2009
7:45 a.m. ICSC Chain Store Sales Index For May 2: Previous: -0.7%.
8:55 a.m. Redbook Retail Sales Index For May 2: Previous: +1.6%.
10:00 a.m. April ISM Non-Manufacturing Index: Expected: 42. Previous: 40.8.
4:30 p.m. API Oil Industry Report For May 1
5:00 p.m. ABC/Wash Post Consumer Conf For May 2: Previous: -45.

Wednesday, May 6, 2009
8:15 a.m. Apr ADP Employment Survey: Previous: -742K.

Thursday, May 7, 2009
8:30 a.m. Initial Jobless Claims For May 2 Week Expected: -1K. Previous: -14K.
8:30 a.m. 1Q Productivity: Expected: +0.3%. Previous: -0.4%.
8:30 a.m. 1Q Labor Costs: Previous: +5.7%.
10:00 a.m. DJ-BTMU Business Barometer For Apr 25
3:00 p.m. Mar Consumer Credit: Expected: -$5B. Previous: -$7.5B.
Apr Chain Store Sales

Friday, May 8, 2009
8:30 a.m. Apr Non-Farm Payrolls: Expected: -628K. Previous: -663K.
8:30 a.m. Apr Unemployment Rate: Previous: 8.5%.
10:00 a.m. Mar Wholesale Trade: Expected: -1.0%. Previous: -1.5%.


Key Earnings Announcements This Week:

Monday, May 4, 2009
Before: ASF, ATRO, B, CCC, DISCA, DSPG, DCO, ETR, EL, HAE, HSIC, INXI, MNKD, MCY, NAFC, OZM, OSG, POR, PL, PEG, RDWR, SOHU, S, SYY, TSTY, TSN
During: -
After: AIMC, AFG, ARRY (?), BWY, TAST, CHK, CGNX, CNB (?), CRK, EXBD, CUTR, DEPO, DW, DFT, EOG, EPIC, EXR, FMC, FST, HAIN, HLIT, HE, HCN, HLS, HLF, HRC, HOLX, IMMR, IPHS, IPCM, KND, LF, MCK, MIG, MYGN, NATL, N, EGOV, OTTR (?), PKY, PPS, PFG, PRA, PSB, QGEN, RJET, SBAC, SM, STAN, SNHY, SYKE, TX, TXRH, TRMA, VMC, WWW

Tuesday, May 5, 2009
Before: ALU, AYE, AHCI, ARJ, ADM, ATRC, ADP, AVP, BBG, BAM, FUN, CEVA, CHD (?), XEC, CBB, CWEI, CTSH, CEG, CVS, CYNO, DNR, DRH, DUF, DUK, EE, EMS, EMR, FE, FCL, RAIL, FTEK, FNDT, GET, GGC (?), WOLF, HHS, HW, HNT, HTV (?), HEW, ICON, ICE, IPGP, KFT, LDR, LM, LPX, MAC, HZO (?), MVL, MXGL, MAXY (?), TAP, TYPE, NNN (?), NSTC, NPSP, PTRY, PAG, PER, PQ, PNW, PCP, PGN, RDN, RVSN, RMG, RBA, SRE, SIRO, SKH, SAH, SE (?), JOE, SHOO, SWSI (?), THC (?), TEVA, TDW (?), GTS, UNT (?), VRX, VTR, WTI, WLK, WY, WEC, WATG, WYNN, ZBRA
During: -
After: PAR, ARAY, ABCO, ARG, AMMD, AGII, ARM, ATML, AUDC, BIDZ, BBND, CBM, CDR, CTX, CEDC (?), CEPH, CRL, COGT, CUZ, DENN, DM, DEI, ERTS, ESE, XCO, FEIC, FVE, GHDX, SOLR (?), GUID, HNSN, HRS, HSTX, HLX, HIL, ICFI, JCOM, JKHY, KCP, KFRC, KGC, LNA, MASI, MXWL, NCIT, NBIX, ONNN, PACR (?), PZZA, PXD, PBI (?), PLT, PLXT, PHM, RACK, RHB, SLXP, SIRF, SPSS, TSCM, TIE (?), TNS, TRLG, UDR, UPL, UNTD, UTI, VCLK, VOLC, DIS, WBMD, WCG (?), XNPT, ZIPR, ZGEN

Wednesday, May 6, 2009
Before: AAON, ACIW, ACOR, ADES (?), AGU, AFAM (?), ANR, ALVR, ACAS, WTR, STST, AUXL, BX, BXC, BYD, CSE (?), GIB, CTB, DVN, DSX, DTG, RRD, ENB, EXLS, FNM (?), FWLT, GRMN, GEL, HEES, NRGY, IRC, IART, ID, LCRY, LINC, MMP, MGA, ME (?), MMC, MLM (?), MITI, MINI, NURO, NEWS, OWW, PKD, HK, PCG, POL, POWL, PWR, KWK, RIGL (?), SNH, SBGI, SKYW, SEP, SPNC, TRK, TDS (?), TTI, TICC (?), RIG, TRW, USM (?), VNO (?), WNR, XTO
During: -
After: TDSC, ACTS, AMRI, ALJ, AEL, ARII, APC, ATW, CAR, BAS, BGCP, BBB, NILE (?), SAM (?), BEXP (?), CAMD, CECO, CHDN (?), CSCO, CNL, COGO, RIO, CPII (?), CCRN, EGLE, ELON, ECLP, ENH, ENOC, EQY, EXPD, FRT, FBN (?), ROCK, GIVN, GCA, GLBL, GCOM, GDP, GXP, HVT, HT, HIMX (?), HME, HPT (?), INSP, IRF (?), IO, KNDL, LVS (?), LHCG, LLNW, LPSN, LMAI (?), LOCM, MCHX, MKL, MDTH (?), MBLX, MGM (?), MIDD (?), MUR, NABI, NCMI (?), NSR, NWS.A, NVEC, OCNW, ONXX, OTEX, OTEX, OSUR, OEH, OFIX, VITA, MALL, PVA, PAA, PPO, PRU, PSSI, QLTY, RBC, REG, SVNT, SENO, SCI, SMSO, SGY (?), SUN, SUPX, SURW, SYMC, SYMM, SNCR, TBSI, TS (?), TSO, THQI, USU, VTAL, GB

Thursday, May 7, 2009
Before: ACM, AER, AYR, ATK, ALD (?), ALY (?), ABK (?), ABV, AIG (?), AOB (?), AHII, AHSS, ARCC (?), ARIA, ARQL, ATPG (?), FLY, BCE, BCRX (?), BVF (?), BPZ (?), BRNC (?), CVC, CAM, LSE, CRZO (?), CKP, CGX (?), CNSL, CLR, CPA (?), CXW, COWN (?), CXR (?), CRYP, CTCM, CYPB (?), DWSN (?), TRAK, DK, DGIT (?), DTPI, DTV, DHI, DYN, RDEN (?), ETM, ENZN, FTK (?), FIG (?), FTR, FTO, GM (?), GNA, GLG (?), GG, GPX, GAP (?), GPOR (?), HWK (?), HPY, HOC, HDIX, HWCC (?), HRP (?), ITWO, IDA, IMAX, IPSU, INCY, ISPH, ISIS, JMP, KEG (?), KNOL, KOP, KSWS, LAMR, LNY (?), LEAP, LEA (?), LXP, LINE, MIC, MMS, MPW, PCS, MEND, MDS, MNTA, NDAQ, NRP (?), NCI, NGPC (?), NICE, NRF, NOVN (?), OMG, OHI, PCAP (?), PPCO, PRFT, PRGO, PDC, PXP, PGNX (?), QCCO (?), RSTI, RDC, RGLD, RRST, SLE, SMBL, BID, SRT, STXS, STE, SPH, SUI, SUP (?), SUSS, SFY, SXCI, SMA, NGLS, TLKC, TNC, TDC, TRI, TWGP, THS (?), TRMS (?), RMIX, USPH, VIP (?), WMG, WSO (?), WW, WEN, WS, WWE
During: DIOD, OPTR (?), THI
After: ATVI, ADPT, AES (?), AIRM, ALL, ALNY, AIG, APEI, ARP, AHS, ANDE (?), ARNA (?), AGO, AVNX, AVNK (?), BYI, RATE, BEBE, NILE, CELL, BRKS, CAP, CPKI, CPE (?), CNQ, CBOU, CBS, CHRD, COHR, CSTR, COMV, CROX, CUB (?), DAR (?), DPM, DCT, DPTR (?), DNDN (?), DXCM (?), DIVX, DXPE, BAGL, EBS, ERII, EXEL, FCH, FSYS, GNW, GOK (?), HANS, HLYS (?), HMIN, IDSY (?), INWK, POSS, IDCC (?), INAP, IRF, IPI, ISTA, LMNX, MVSN, ME (?), MSSR (?), MCGC (?), MRX (?), MCHP (?), MAA, MIL, MOVE, MSCS, MFLX, NHP, NEWP, NVTL, NVDA, OMPI, OIS, PDLI, PEGA (?), POM, PCR, POWR, PRO, PSA, RAH, RNWK, RSCR, RMD, ROSE (?), RRR, RTEC, SD, SAPE, SGMS, SHOR, SRX, SRSL, SHO (?), SVR, TK (?), KNOT, THOR (?), UEIC, YSI, VRSN, VVUS (?), WTW, INT

Friday, May 8, 2009
Before: ACET, ARD, BECN, BZH, CCOI, CODI, CEP, XTEX, DRQ (?), EIX, IP, EPB, EVEP (?), IT, HUN, VTIV, LRN, MAG, MSC, MEA, MIR, NGS, NXG, SNI, VNUS, WR, WIN
During: -
After: CCIX, PCLN


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.

Indecisiveness Reigns on the Daily Time Frame

(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 indices tallied another strong open on Thursday. The first half of the week was marked by large downside gaps that filled quickly, but Wednesday and Thursday both experienced large upside gaps that held throughout the morning. Both the S&P 500 and Dow Jones Ind. Ave. futures gapped above Wednesday's highs. This extended the moves. The Nasdaq had a smaller comparable gap and opened just under Wednesday's highs. The lesser degree of extension helped the index move strongly higher, whereas the S&Ps and Dow shifted momentum more quickly and only inched higher into the 11:15 ET correction period.

The morning rally came on the heels of a number of premarket economic reports. Jobless claims fell 14,000 to 631,000 last week. The Commerce Department then announced that personal income fell 0.3% in March while personal consumption fell 0.2%.

Dow Jones Industrial Average ($DJI)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501dow.gif

The 11:15 ET pivot off the morning highs triggered the first reversal pattern of the day, but it wasn't until about 11:45 ET that the reversal was confirmed. The slowing upside momentum allowed the indices to drop very quickly into noon. Two more waves of downside followed on a 5 minute time frame. The trend became exhausted at approximately 13:15 ET at 5 minute 200 period simple moving average support in the index futures. This same level hit in all three of the major indices and despite the strength of the downside momentum, the support held.

The market did not rally quickly off the 13:15ish lows, but the support was strong enough to pull the market close to 15 minute 20 sma resistance before turning over once again in the final 90 minutes of trade. The upside pace coming off the lows was very gradual and it did not take much incentive to drag the indices back into the day's lows after triggering yet another short setup into the 15:00 ET correction period.

S&P 500 ($SPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501sp.gif

When the indices turned lower into the final hour of trade, the descent was strong enough to manage a slightly lower low on the 5 and 15 minute time frames. This additional push into the earlier support zone on the 5 minute time frames allowed the market to more adequately test the larger 15 minute support levels from the previous afternoon. These are shown in dark green on the 15 minute charts displayed here. The action keeps my bias the same as it has been in recent weeks. I'm not yet willing to bet strongly against the trend in the hope of a larger daily correction, but I am not at all a fan of price action that is just creeping higher or lower with the objective being to take positions in the direction of the trend. Like we saw Thursday morning in the S&Ps and Dow, that type of buying can give way to even faster selling on a break of the lower end of the trend channel.

Nasdaq Composite ($COMPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501nas.gif

The Dow Jones Industrial Average ($DJI) fell 17.61 points, or 0.2%, to close at 8,168.12 on Thursday. The Dow rose 7.35% in April, following a 7.7% gain in March. Gainers and losers in the index were evenly split on Thursday with the upside led by General Motors (GM) (+6.08%) and Caterpillar (CAT) (+5.61%) and the losers led by JPMorgan (JPM) (-4.29%) and Exxon Mobil (XOM) (-2.59%). XOM's first-quarter profits did not meet expectations.

The S&P 500 ($SPX) fell 0.83 point, or 0.1%, and closed at 873.81. The S&P 500 closed higher on the month by 9.4%. Materials and consumer discretionary companies fronted the gains on Thursday. Crude oil prices rose $0.15 a barrel to $51.12.

The Nasdaq Composite ($COMPX) rose 5.36 points, or 0.3%, and it closed at 1,717.30. The Nasdaq was up 12.4% in April with its best monthly gain since November 2001.

One of the top news stories of the day on Thursday was the announcement that Chrysler Group filed for Chapter 11 bankruptcy protection. This was one of the largest of its kind in history and the first automaker since 1933 to go into bankruptcy.933 to go into bankruptcy.

Indecisiveness Reigns on the Daily Time Frame

(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 indices tallied another strong open on Thursday. The first half of the week was marked by large downside gaps that filled quickly, but Wednesday and Thursday both experienced large upside gaps that held throughout the morning. Both the S&P 500 and Dow Jones Ind. Ave. futures gapped above Wednesday's highs. This extended the moves. The Nasdaq had a smaller comparable gap and opened just under Wednesday's highs. The lesser degree of extension helped the index move strongly higher, whereas the S&Ps and Dow shifted momentum more quickly and only inched higher into the 11:15 ET correction period.

The morning rally came on the heels of a number of premarket economic reports. Jobless claims fell 14,000 to 631,000 last week. The Commerce Department then announced that personal income fell 0.3% in March while personal consumption fell 0.2%.

Dow Jones Industrial Average ($DJI)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501dow.gif

The 11:15 ET pivot off the morning highs triggered the first reversal pattern of the day, but it wasn't until about 11:45 ET that the reversal was confirmed. The slowing upside momentum allowed the indices to drop very quickly into noon. Two more waves of downside followed on a 5 minute time frame. The trend became exhausted at approximately 13:15 ET at 5 minute 200 period simple moving average support in the index futures. This same level hit in all three of the major indices and despite the strength of the downside momentum, the support held.

The market did not rally quickly off the 13:15ish lows, but the support was strong enough to pull the market close to 15 minute 20 sma resistance before turning over once again in the final 90 minutes of trade. The upside pace coming off the lows was very gradual and it did not take much incentive to drag the indices back into the day's lows after triggering yet another short setup into the 15:00 ET correction period.

S&P 500 ($SPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501sp.gif

When the indices turned lower into the final hour of trade, the descent was strong enough to manage a slightly lower low on the 5 and 15 minute time frames. This additional push into the earlier support zone on the 5 minute time frames allowed the market to more adequately test the larger 15 minute support levels from the previous afternoon. These are shown in dark green on the 15 minute charts displayed here. The action keeps my bias the same as it has been in recent weeks. I'm not yet willing to bet strongly against the trend in the hope of a larger daily correction, but I am not at all a fan of price action that is just creeping higher or lower with the objective being to take positions in the direction of the trend. Like we saw Thursday morning in the S&Ps and Dow, that type of buying can give way to even faster selling on a break of the lower end of the trend channel.

Nasdaq Composite ($COMPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20090501nas.gif

The Dow Jones Industrial Average ($DJI) fell 17.61 points, or 0.2%, to close at 8,168.12 on Thursday. The Dow rose 7.35% in April, following a 7.7% gain in March. Gainers and losers in the index were evenly split on Thursday with the upside led by General Motors (GM) (+6.08%) and Caterpillar (CAT) (+5.61%) and the losers led by JPMorgan (JPM) (-4.29%) and Exxon Mobil (XOM) (-2.59%). XOM's first-quarter profits did not meet expectations.

The S&P 500 ($SPX) fell 0.83 point, or 0.1%, and closed at 873.81. The S&P 500 closed higher on the month by 9.4%. Materials and consumer discretionary companies fronted the gains on Thursday. Crude oil prices rose $0.15 a barrel to $51.12.

The Nasdaq Composite ($COMPX) rose 5.36 points, or 0.3%, and it closed at 1,717.30. The Nasdaq was up 12.4% in April with its best monthly gain since November 2001.

One of the top news stories of the day on Thursday was the announcement that Chrysler Group filed for Chapter 11 bankruptcy protection. This was one of the largest of its kind in history and the first automaker since 1933 to go into bankruptcy.933 to go into bankruptcy.