Markets Bust Higher, but Backtracks into Close

Markets Bust Higher, but Backtracks into Close

(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 broke strongly higher towards the end of the session on Wednesday. This upside continued well into Thursday morning with once of the strongest upside moves of the year. Early morning data from the Labor Department didn't appear to have much influence on this action and the trend continued higher well into the opening bell. The Labor Department had announced that initial weekly U.S. jobless claims rose 25,000 to a seasonally adjusted level of 584,000 last week. This was close to expectations. Continuing jobless claims fell 54,000 to 6.19 million.

Dow Jones Industrial Average ($DJI)


Earnings have been well-received overall and the market gapped sharply higher into Thursday's opening bell. The gap zone held near highs and very quickly triggered the continuation pattern with a break in the 15 minute highs. This kicked off a very sharp upside move that lasted throughout the first half of the morning. The strongest move took place into 10:00 ET, but the upside remained in play until the 10:45 ET correction period. At that point the indices formed small 5 minute reversal patterns and began to correct into noon.

12:00 ET is a strong correction period in the market and the market did a great job of holding correction periods throughout the session. The pace had shifted sufficiently into noon that the indices did not bounce sharply off the mid-day lows. Instead the indices fell into a trading range into the 14:00 ET correction period. At that point the market broke lower, but only into previous 15 minute lows. A second wave of corrective action followed before the market broke very sharply lower in the final 30 minutes of trade to take back all of the intraday gains and then some.

The market is butting its head on a strong overhead resistance level at this point on the daily time frame and these levels held the market in when it attempted to break higher into the second half of the morning. The S&P 500 futures are dealing with 1,000, while the SPY is hitting the $100 zone. The Nasdaq Composite is running into 2,000 and the Dow is hitting its highs for the year. All of these will be putting pressure on the market on Friday and were a leading cause of the day's reversal off highs on Thursday.

In addition to these resistance levels, the market is going to have to weigh in on the most recent Gross Domestic Product data. It is expected to show a slow-down in the pace of the economic decline. This will be something to really keep an eye on ahead of the open. We are also going into yet another weekend. The market didn't experience much profit-taking last Friday, but it will be a stronger possibility this time around as a result of the daily price resistance.

S&P 500 ($SPX)


By the time the session ended the Dow Jones Industrial Average ($DJI) was "only" up 83.74 points on Thursday, or 0.92%, to end the session at 9,154.46.Five of the Dow's 30 index components posted a loss despite the overall market strength. Travelers (TRV) fell 1.62%, followed by a 1.45% loss in McDonald's (MCD), and a 0.99% decline in Exxon Mobile (XOM). TRV and XOM were both down on earnings data. General Electric (GE) was the strongest Dow component and climbed 6.93%. DuPont (DD) came in second with a gain of 4.30%, and Alcoa (AA) rose 4.09%.

The S&P 500 ($SPX) rose 11.60 points, or 1.19%, and closed at 986.75. 398 of the S&P 500 index components posted gains. All 10 of the S&P's industry groups were higher. Crude oil futures were also up once again on Thursday. They moved higher by 5.6% from $63.35 on Wednesday to $66.92 a barrel.

The Nasdaq Composite ($COMPX) rose 16.54 points, or 0.84%, and it closed at 1,984.30 on Thursday. 69 of the Nasdaq-100's index components posted gains.

Nasdaq Composite ($COMPX)



Note: I will be out of town next week attending the Forex and Options Expo in Las Vegas and then heading to Dallas for several meetings. As a result, I will not be sending out my Daily Market Action Letter at that time. Please login to view my webcast on Monday, however, at 10 am PDT!

Whip-Saw Session for the Indices Ends Modestly Lower

Whip-Saw Session for the Indices Ends Modestly Lower

(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 all over the place in Wednesday's session, spending the day locked into the range on the 60 minute time frame. Despite strong downside moves within that range, the indices still managed to recover by the end of the day and finish the session with only mild losses.

Dow Jones Industrial Average ($DJI)


The intraday weakness on Wednesday began with the opening bell. The index futures gapped lower into the open despite recovering from a very sharp drop at 2:00 am ET when the European markets were opening. By the open, however, they had begun to react to the earlier breakdown resistance zone and were turning lower. The reversal was aided by the announcement of the largest decline in durable goods orders since January. They fell 2.5% in June after a downward revision from a gain of 1.8% in May to a gain of 1.3%. Excluding a decrease in transportation goods, however, orders were actually up 1.1%. Transportation goods alone fell 12.8%.

That weakness into the opening bell continued into the first correction period of the day at 9:45 ET. This correction period held perfectly and the market formed another "V" type of bottom. This was only one of many similar reversals took place throughout the session. Over and over the market attempted to break through the lows of the daily trading range only to bounce quickly higher. Finally it seemed that the bears simply gave up and called it a day. There was not much to cheer the bulls, but that did not seem to worry them. The indices broke out of choppy, low-level trading with the 15:00 ET correction period after hitting three lows earlier in the session and began to climb strongly higher into the close and beyond.

S&P 500 ($SPX)


Despite the strong reversal, the Dow Jones Industrial Average ($DJI) still closed lower by 26.00 points on Wednesday, or 0.29%, to end the session at 9,070.72. Just over half of the Dow's index components posted losses and they were led by a 2.49% decline in Caterpillar (CAT) and a 2.2% decline in Alcoa (AA). General Electric (GE) followed with a loss of 2.08%. The top gainers were the telecoms. Verizon (VZ) rose 1.85%, while AT&T (T) rose 1.68%. United Technologies (UTX) rose 1.45%.

The S&P 500 ($SPX) fell 4.47 points, or 0.46%, and closed at 975.15. Crude oil futures fell heavily in the morning and remained weak into the close. The Energy Information Administration reported that crude supplies rose 5.1 million barrels last week. They had been expected to increase 1.1 million barrels. Crude fell 5.8% to finish the session at $63.35 a barrel for its largest one-day loss in the past two months. Energy shares were down in conjunction with this news and were the S&P's weakest sector. The S&P 500 Energy Sector ETF (XLE) closed lower by 2.3%.

The Nasdaq Composite ($COMPX) fell 7.75 points, or 0.39%, and it closed at 1,967.76 on Wednesday. Yahoo (YHOO) took a big hit when it fell 11.9% on news of YHOO and Microsoft's advertising and search deal. Microsoft (MSFT) rose 1.3%.

Nasdaq Composite ($COMPX)


Earnings will be continue to be very heavy this week with approximately 1,600 companies reporting and Thursday will be the busiest day for them. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com. The indices are continuing to trade in a high-level base on the 60 minute time frame. The pace has still not shifted sufficiently within the range itself to offer any strong bias for a directional break. The main impetus this week has been the news events. This makes the stock market a good place to focus upon for daytrades since this is an easy time to focus upon momentum gainers and losers to outperform and underperform the overall market and offer stronger trends and more lasting follow through than the overall market.


Note: I will be out of town next week attending the Forex and Options Expo in Las Vegas and then heading to Dallas for several meetings. As a result, I will not be sending out my Daily Market Action Letter at that time. Please login to view my webcast on Monday, however, at 10 am PDT!

Market Holds 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.)


Good day! No matter how badly the market acts like it wants to correct from this month's huge upswing, the bulls simply refuse to let go of the reins. Even when things were looking rather bleak on Tuesday morning, the market still managed to make a come-back. The session began with a gap lower into the opening bell at the S&P's 5 minute 200 period simple moving average support and the Nasdaq's 5 minute 200 sma and 15 minute 20 sma support.

Dow Jones Industrial Average ($DJI)


Ahead of the open the S&P Case-Shiller home-price index reported that home prices in the 20 largest metro areas rose 0.5% in May, which is the first monthly increase since July 2006. This news and the support levels were more than enough to allow the indices to bounce swiftly higher and close the gap. The momentum remained strong and even took the market back to previous 15 minute highs. At 10:00 ET, however, even stronger selling hit on the heels of the most recent consumer confidence data.

The Conference Board reported on Tuesday that its consumer confidence index fell for a second month in a row. It dropped to 46.6 in July from an unchanged reading of 49.3 in June. It had been expected to fall to only 48, and the market did not take the news very well. The Dow was the strongest and fell back to the morning lows as support at the 10:15 ET correction period. The S&Ps and Nasdaq, however, broke through the opening lows. The Nasdaq returned to Monday's mid-day lows, while the S&Ps fell into Monday's morning lows. Both of these support levels hit at the same time as the Dow's support and the correction period, but the correction off the lows only managed to make it to the 5 minute 20 sma resistance before the selling continued with a second wave of downside on the 5 minute time frame.

S&P 500 ($SPX)


Throughout the remainder of the morning the Dow was the downside leader. It fell to Friday's lows before finding support. Meanwhile, the Nasdaq barely managed a slightly lower low intraday before it began to turn around. This turnaround began at approximately 11:30 am ET. Even though the pace of the buying was not stronger than the selling, after the indices based along the 5 minute 20 sma resistance a strong Phoenix™ buy setup took place. The indices had based along that resistance level with very light volume. This showed a lack of strong continued selling and the base broke sharply higher out of the 13:00 ET correction period.

The Nasdaq led the afternoon rally with the help of the tech shares. The index surged higher and the S&P and Dow rode its coat tails. This was a much stronger move than I had anticipated given the extent of the morning selloff, but the bulls are quite stubborn and three waves of buying followed this Phoenix™ breakout on the 2 minute time frame until all three of the indices were back at the upper end of the 60 minute trading range. This level hit at the 138% Fibonacci retracement level from the morning decline in the Nasdaq and the indices turned lower into the final 90 minutes of trade. The action was choppy, however, and the market held 15 minute 20 sma support to pull back higher into the closing bell. This left all three of the major indices relatively unchanged on the session despite the wide intraday swings.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) slipped 11.79 points on Tuesday, or 0.13%, to close at 9,096.72. This was after a recovery from a triple digit loss earlier in the session. More than half of the Dow's 30 industry components posted losses. They were led by a 3.55% decline in Pfizer (PFE), a 2.47% decline in American Express (AXP), and a 2.44% decline in Merck (MRK). The top leaders were Boeing (BA) (+2.39%), Bank of America (BAC) (+1.91%), and General Electric (GE) (+1.62).

The S&P 500 ($SPX) fell 2.56 points, or 0.26%, and closed at 979.62. Crude oil futures triggered a momentum reversal short on a 30 minute time frame into the opening bell, but they did so with a gap lower and held early morning lows. Even when the rest of the market rallied, oil continued to lag and closed down from $68.38 on Monday to $67.23 a barrel on Tuesday.

The Nasdaq Composite ($COMPX) rose 7.62 points, or 0.39%, and it closed at 1,975.51 on Tuesday. Amgen (AMGN) played a large role in the Nasdaq's gains after it broke out from a trading range along highs last week and then gapped sharply higher yet again into Tuesday's open. It reported earnings of $1.25 a share, up $0.84 from last year. Amazon.com (AMZN) also had a strong 60 minute momentum reversal and took off to the upside mid-day. Microsoft (MSFT) joined in, and these stocks played a major role in the index's mid-day surge.

Earnings will be continue to be very heavy this week with approximately 1,600 companies due out ahead of the weekend. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com. The indices are continuing to trade in a high-level base on the 60 minute time frame heading into Wednesday. The pace has still not shifted sufficiently within the range itself to offer any strong bias for a directional break. The main impetus this week has been the news events. This makes the stock market a good place to focus upon for daytrades since this is an easy time to focus upon momentum gainers and losers to outperform and underperform the overall market and offer stronger trends and more lasting follow through than the overall market.


Note: I will be out of town next week attending the Forex and Options Expo in Las Vegas and then heading to Dallas for several meetings. As a result, I will not be sending out my Daily Market Action Letter at that time. Please login to view my webcast on Monday, however, at 10 am PDT!

Market Gets Stuck in Range as it Digests Data and Recent Gains

Market Gets Stuck in Range as it Digests Data and Recent Gains

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

Good day! The market has spent the better half of the past three days trading in a narrow range on the 60 minute time frame after rallying sharply higher on Thursday morning. Despite repeated attempted to shift the momentum within the trading range in favor of the bears, the market has not yet been able to get past an initial 15 minute push lower. The same thing occurred on Monday morning. The indices had crept higher throughout most of the session on Friday and opened relatively unchanged on Monday morning.

Dow Jones Industrial Average ($DJI)


At 10:00 am ET the market received a brief boost once again when June's new homes sales data was released. It showed the fastest increase in sales in more than eight years. According to the Commerce Department, new homes sales rose 11% in June to a seasonally adjusted annual rate of 384,00 from an upward revision of 346,000 in May. This followed last week's announcement of an increase of 4% in June for existing home sales. The federal government is currently offering a tax credit for 10% of the home price or up to $8,000 for first-time home buyers, but the sales must be completed by the end of November. The news is still not great, however, because foreclosures remain high and home prices are still falling. The median sales price is $206,200. In May it was $219,000.

After establishing three waves of upside on the 15 minute time frame coming off Friday's lows, this news was not enough to combat the larger trend exhaustion. The indices quickly broke through the lower end of the uptrend channel on the 5-15 minute time frames and returned to intraday lows before easily breaking through those as well.

S&P 500 ($SPX)


This early morning selloff did not make it further than this initial push lower on the 15 minute time frame, much as the one on Friday morning. The 10:45 ET correction period held and the indices formed a "V" pivot coming off the lows. When this occurs, it tends to lead to a longer trading range. The market held resistance at the level where the previous day's uptrend channel broke lower and the market pulled back over noon. The indices couldn't shake the 15 minute 20 sma resistance, however, despite forming a change of pace on the 5 minute time frame over noon with a strong breakdown attempt coming out of the 13:00 ET correction period. This selloff was rapid, but it was also very brief. The market held support at 13:30 ET and turned higher once again throughout the middle of the afternoon. An equal move zone hit just prior to 15:00 ET on the 15 minute time frame and the indices pulled back once again. This time the 15 minute 20 sma was support and it held into the final 30 minutes of trade.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) gained another 15.27 points on Monday, or 0.17%, to close at 9,108.51.17 of the Dow's 30 index components posted gains. Bank of America (BAC) was the Dow's leader with a gain of 4.6^%. Alcoa (AA) came in second with a gain of 2.5%, while General Electric was third with a gain of 2.4%. American Express (AXP) was the biggest loser with a loss of 3.83%, followed by a 1.59% loss in Verizon (VZ) despite having beat earnings expectations.

The S&P 500 ($SPX) rose 2.92 points, or 0.30%, and closed at 982.18. Financials and consumer discretionary shares led the gains as the market took a turn higher into the afternoon. Crude oil futures rose slightly from $68.05 a barrel to $68.38 a barrel. Many of the largest energy companies will be reporting earnings this week, beginning with BP (BP) ahead of Tuesday's opening bell.

The Nasdaq Composite ($COMPX) rose 1.93 points, or 0.1%, and it closed at 1,967.89 on Monday. 56 of the Nasdaq-100's index components posted gains.

Earnings will be continue to be very heavy this week with approximately 1,600 companies due out ahead of the weekend. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com/. Additionally, on Tuesday the government is planning to sell $42 billion in two-year notes, with $27 billion in 52-week bills and $30 billion in 4-week bills with more note sales to follow on Wednesday and Thursday. Despite the daily extension, the indices are trading in a high-level base on the 60 minute time frame heading into Tuesday. I've been watching for action to suggest a larger price or time correction off the rally of the past two weeks, but, like I mentioned earlier, so far the market has failed to confirm any attempt past an initial 15 minute pullback. Earnings plays will offer a refuge from the choppier overall market, so keep an eye on the gainers and losers for relative strength and weakness to provide greater momentum moves.


Note: I will be out of town next week attending the Forex and Options Expo in Las Vegas and then heading to Dallas for several meetings. As a result, I will not be sending out my Daily Market Action Letter at that time. Please login to view my webcast on Monday, however, at 10 am PDT! http://www.moneyshow.com/video/details.asp?wkspid=2D34F85BF28A4B0BAB8A4EEED8AD2445&pg=1&scode=015234

Nasdaq Breaks Winning Streak, but Dow and S&Ps Post Gains

Nasdaq Breaks Winning Streak, but Dow and S&Ps Post Gains

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

Good day! Most traders I spoke with heading into Friday's session were watching for some profit-taking heading into the weekend after the market posted two strong weeks of gains. The indices even triggered a momentum reversal short setup into the closing bell on Friday after the pace had shifted on the 15 minute time frame the previous afternoon. Interestingly, however, the initial follow through took place afterhours following disappointing earnings from the likes of AMZN and MSFT. It then recovered in the early morning hours before heading lower once again with a premarket Avalanche™ on a 5 minute time frame to offer intraday follow through as well.

Dow Jones Industrial Average ($DJI)


The market recovered somewhat from this Avalanche™ out of the opening bell to close the downside gap in the S&P 500 and Dow Jones Industrial Average. The 9:45 ET correction period held, however, and the indices again turned lower and eventually fell back into the area of the afterhours and premarket lows. This area continued to hold as support despite the multi-week gains. The pace on the smaller time frames shifted intraday and the the market bounced off lows around 10:00-10:15 ET. The indices held the 5 minute 20 sma, slid down that resistance level with a slower decline than out of 9:45 ET and with lighter volume. As a result, they were able to break through that resistance level coming out of the 11-11:15 ET correction zones.

The zone of the morning highs intraday served as resistance over noon and the overall pace of the buying on the 15 minute charts was more gradual than the previous decline on the intraday time frame, but the trend remained bullish into the closing bell. The indices moved into a 2-wave correction over noon along the 15 minute 20 period simple moving average with volume declining throughout. This created a buy setup on the 5 minute time frame that took the market through the 15 minute 20 sma resistance. Volume picked up at that point, but the strong momentum breakout at approximately 13:30 ET was short-lived.

S&P 500 ($SPX)


The zone from the gap closure in the Nasdaq and the channel into Thursday's highs served as resistance and the market had a difficult time establishing strong trend moves on even a 5 minute time frame throughout the rest of the session. This choppy action was likely the result of some profit-taking, but the inability of such action to create a reversal into the close kept enough optimism in place to allow the indices to close at highs and for the index futures to push even slightly higher afterhours before trading ended for the week at 16:15 ET.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) gained another 23.95 points on Friday, or 0.26%, to close at 9,093.24. The Dow ended the week higher by 4%. It's two-week gain came to 11.6% and was its best two-week gain since 2000. Pharmaceuticals were very strong on Friday and the top three gainers in the Dow were Merck (MRK) (+2.45%), Johnson & Johnson (JNJ) (+2.14%), and Pfizer (PFE) (+2.04%).

The S&P 500 ($SPX) rose 2.97 points, or 0.30%, and closed at 979.26. The S&P 500 ended the week higher by 4.1%. Friday's gains were led by health care, utility, and energy stocks. Crude oil futures climbed yet again and were up from $67.16 a barrel on Thursday to $68.05 a barrel by Friday's close. A number of energy companies will be posting earnings this coming week. These include Dow components Exxon Mobil (XOM) on Thursday and Chevron (CVX) on Friday. ConocoPhillips (COP), BP (BP), and Royal Dutch Shell (RDS.A) are among the others that will also be releasing earnings.

The Nasdaq Composite ($COMPX) fell 7.64 points, or .039%, and it closed at 1,965.96 on Friday. It was quite a feat that the index did not lose more than it did. Microsoft (MSFT) and Amazon.com (AMZN) were both down substantially following disappointing earnings the previous afternoon. MSFT closed lower by 8.26%, while AMZN lost 7.86%. The Nasdaq closed higher by 4.2% on the week.

Earnings will be the heaviest during this coming week. Approximately 1,600 companies are due to report. They have been better than expected on those companies that have already released earnings, with 77% of the S&P 500 beating estimates so far. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com.

I remain more cautious on new swingtrade buy setups at this time, but we still don't have any 15 minute corrective moves that have lasted long enough to last more than a single session in the case of a sideways correction and much less in the case of stronger price corrections. The Nasdaq is hitting its 20 month sma, but the Dow doesn't have another major resistance level until approximately 9,400. By pushing higher at the end of the week, the market no longer has to round off as much off highs and can more easily form a pivot off highs when it corrects as opposed to the rounded highs or a price trading range.

Economic Reports and Earnings Events This Week

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Catch me next Monday at the Forex and Options Expo in Las Vegas! You can also view the webcast at http://www.moneyshow.com/video/details.asp?wkspid=2D34F85BF28A4B0BAB8A4EEED8AD2445&pg=1&scode=015235

Economic Reports and Events This Week

Monday, July 27, 2009
New Home Sales 10:00 AM ET
4-Week Bill Announcement 11:00 AM ET
3-Month Bill Auction 11:30 AM ET
6-Month Bill Auction 11:30 AM ET
20-Yr TIPS Auction 1:00 PM ET

Tuesday, July 28, 2009
ICSC-Goldman Store Sales 7:45 AM ET
Redbook 8:55 AM ET
S&P Case-Shiller HPI 9:00 AM ET
Consumer Confidence 10:00 AM ET
State Street Investor Confidence Index 10:00 AM ET
4-Week Bill Auction 1:00 PM ET
52-Week Bill Auction 1:00 PM ET
2-Yr Note Auction 1:00 PM ET

Wednesday, July 29, 2009
Bank Reserve Settlement
MBA Purchase Applications 7:00 AM ET
Durable Goods Orders 8:30 AM ET
EIA Petroleum Status Report 10:30 AM ET
5-Yr Note Auction 1:00 PM ET
Beige Book 2:00 PM ET

Thursday, July 30, 2009
Weekly Bill Settlement
52-Week Bill Settlement
Jobless Claims 8:30 AM ET
EIA Natural Gas Report 10:30 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
7-Yr Note Auction 1:00 PM ET
Fed Balance Sheet 4:30 PM ET
Money Supply 4:30 PM ET

Friday, July 31, 2009
2-Yr Note Settlement
5-Yr Note Settlement
7-Yr Note Settlement
20-Yr TIPS Settlement
GDP 8:30 AM ET
Employment Cost Index 8:30 AM ET
Chicago PMI 9:45 AM ET
Farm Prices 3:00 PM ET


Key Earnings Announcements This Week:

Monday, July 27, 2009
Before: ACV, ANR, BOH, BWP, GLW, DEP, EPD, FCF, FCL, HON, ICO, LO, NTY, ONB, PVTB, RSH, RSWR, RPM, SOHU, TFX, TLAB, TZOO, VZ
After: ACE, ACTU, AMGN, BWLD, CF, CVTI, CR, CTS, CW, DAC, ENOC, FNF, FADV, FELE, LOPE (?), HMA, HTLF, HXL, IVAC, KRC, LDSH (?), LCRD, MTW, MAS, MTH, MSPD, OLN, OMI, PRE, PNSN, PFWD, PCL, RGA, RCII, RKT, RCKY, SBCF, SLG, SONO, TMK, VECO, WRB, ZRAN

Tuesday, July 28, 2009
Before: CAS, ARLP, AMB, AMFI, AMED, ECOL, AME, AXE, AVX, BEAV, BP (?), CPLA, BEAT (?), CE, CNC, CRDN, CHKP, CSR, CBR, COH, CPO, CVH, CYNO, DRH, DIN, ELNK, ECL, ENR, EVVV, FMER, FPL, FDP, GPI, HSC, HW (?), HGRD, HSII, IPG, IMA, JEC, KEI, KVHI, FSTR, LCAV, LECO, MKTX, MHP, MEA, MSA, NAFC, NOV, ODP, ORB, PCAR, PCX, PAS, PCH, POZN, QLTI, ROK, ROP, SBNY, SII, SAH, SRT, STFC, SVU, TEVA, TXT, X, UA, VLO, VIA.B, VIGN (?), VSH, WDR, WAT
After: ACTL, ADVS, ATAC, ACLI, AFG, ANAD, AJG, AXYS (?), BLDP, BBSI, BBOX, BDN, BTUI, BPL, CLMS, CALD, CRI, CAVM, CBI, CTX (?), COLM, CMP, CSGS, DFG, DBTK, DWA, EHTH, ERTS (?), EQ (?), EAC, ENH, EPIC, EPIQ, EXAC, FALC, FIS, FTI, HGR, HTZ, IDTI, IDCC, KEYN, KONA, LNDC, XPRT, LIFE, MEE, MCK, MMSI, MEOH, MRH, NLC, NAL, NSC, PNRA, PMTC, PEET, PLT, PSYS, STR, RSYS, RNR, SBAC, SMTL, SWIR (?), SSTI, SSD, SIRF, SPTN, SRCL, STM, SUMT (?), SPN, SDXC, TE, THQI, TSS, TRMB, TRMK, ULTI, UHS, USNA, WTS, WBSN, WCG, WDC, XL

Wednesday, July 29, 2009
Before: ADLR, ART, AMG, ALVR, AMAG, AMT, APU, MT (?), ACAT, ARW, ASPM, BDC, BHE, BWA, BPO, CBZ, CEVA, GIB, CCE, COP, DXYN, ENB, EQT, EEFT, EVR, FSRV, GD (?), GLBC, HL, HES, HSP, IACI, IWA, JAKK (?), JNY, KBW (?), KLIC, ID, LAZ, MSO, MWV, MHS, MDP, MCO, MPS, NSTC, NICE, NJR, NWPX, NUS, NYB, OIIM, PENN, PEI, PAG, PTEC, PX, Q, ROC, RCL, RES, RBCN, SAP, SVVS, SMG, SEE, SLAB, SPIL, SO, S, SPW, SSYS, SYNT, TLM, TASR, MDCO, TDW, TBL, TWX, TBL, TWX, TWC, TKR, TWP, TWL, UGI, UMC, USAP, VPHM, VNUS (?), WPI, WLP, WRLD, WXS, WYN
During: BOKF
After: ACXM, AEA, AFL, ARM, AKAM, AIQ (?), AGNC, AMKR, NLY (?), ASIA, AIZ, ATML (?), AVB, BARE, BAS, BMR, CBT, CDNS, CWT, ELY, CBG, CDR, CERN, CHH, CHDN, CIR, CLF, CTV, CML, CITP, CVD, CCI, XRAY, DRIV, DRC, DRE, EGP, EFII, ENTU (?), EQY, EQR, ESRX, DAVE, FARO (?), FISV, FLEX, FLS, FMC, FORM, GNK, GMR, GERN (?), GMKT (?), GG, GMCR, GSIC, HBI, HIG, HLX, HIW, HMN (?), IFSIA, ITRI, KALU, KEX, LRCX, LNC, LOOP, LSI, MANT, MTZ, MBLX, NETL, NBIX, NTRI, OII, OIS, ORLY, OI, MALL (?), PLXS, PRAA, QCOR, O, RNOW, RYL, SGMO, SIGI, SQNM (?), SFLY, SIMO, SFN, STNR (?), RGR, SRDX, SYMC, SMMX, TTEC, TER, TSO, TTEK, TSCM, TWPG, TLGD, CLUB, TRMA, TRN, TGI, TTMI, TYL, URI, UAM, VARI, VAR, V, WCAA, WLL, WSH

Thursday, July 30, 2009
Before: AKNS, ALU, AMSC, ABC, AOC, APA, ARJ, AWI, ARTG, ABG, AACC, AZN, ATRO, ADP, AVY, AVP, ABX, BDX, BIOS, BCO, BRKR (?), BC, BBW, CAB, CVC, CCC, CALP, CP, CRR, CRS, CDI, GTLS, CHE, CI, CINF, CMS, CXG, CL, CNMD, CNX, CVG, COV, CXR (?), CRY, CMI, DLR, DDE (?), DVD (?), DOW, EK, EBIX (?), ELON, EME, ELMG (?), ENDP, EXPE, XOM, FSS, FAF, FORR, BEN, GWR, GLS, GTIV, GT, GTI, HP, HEP, HOS, ICTG, IPSU, INCY, IP, ITG, IRM, KDN (?), KBR, KSU, K, KMT, KIM, LEA (?), LVLT, LFUS, LKQX, LZ, MHO, CLI, HZO, MA, MED, MFA (?), MOT, MYL, BABY, NWL, NOVA, NRG, NYX, OMX, ZEUS, OCR, OSK, PMTI, PTRY (?), PH, PTI, PTEN, PCCC, PCZ, PDE, RVSN, RYN, RGC, RSG, REV (?), COL, RDS.A, RTIX, SCG, SI (?), SNN, SNE (?), FIRE, SPR, STE, SHOO, STRA, TSM, TNC, TEN, TPP, TRV, TYC, ULBI, UTHR (?), VCI, VTR, WBC, WMI, WEC, XEL
During: MFE
After: ABAX, APKT, ADPT, AB, AMCC, ARBA, ARRS, AXTI, BEZ, BEC, BMRN, BLKB, CAP (?), CPT, CEC, CPHD, CHRD, FIX, CYH, SCOR, CRAY (?), PROJ, DEPO, DLB, DW, DSCM, DRYS, DTE, DNB, DXPE (?), BOOM, ERES, ESLR, EXAR, EXEL, EXTR, FSLR, GXDX, GPRO, GNW, GFIG, HNSN, HGIC, HLIT, HLTH, HOKU, HTCH, IDSY (?), IMMR (?), IM, ININ, IN, ITMN (?), IPCS, LVS, LAD, LOCM, MET, MHK, MPWR, MWW, MORN, MRT (?), NANO, N, NSR, NR, NEWP, NVTL, ORH, OPWV, OPNT, OFIX, PDLI, PSEM (?), PKI, PBI, POWI, RADS, RNWK, RRR, SGMS, SSW (?), SLW, STMP, SGY, SWN, SYNA, SNCR, TLEO, TWLL, TSYS, THOR (?), USTR, VSEA, VRTX (?), VPRT, VLCM, DIS, WBMD, WRI, YRCW

Friday, July 31, 2009
Before: AGN, AEP, AGP, AIV, AN, BLC, BW, CVX, SUR, CEG, D, GHM, HHS, HMSY, IBI, ITT, MGLN, MDC, TYPE, MWIV, NRF, PKD, PEG, SRE, SIRO, SNA, SRI, TOT, WY
After: CNB (?)

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.

"Wowza! Dow Hits 9K"

"Wowza! Dow Hits 9K"

(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! Jobless claims were up 30,000 to 554,000 last week, but this had no negative impact on the markets heading into Thursday's opening bell. In fact, there wasn't much at all that could put a damper on the market's positive spirit. When I wrote yesterday's column, I was looking at the amount of extension on the 60 minute time frames, as well as the momentum of the moves on the up and downside intraday compared to the daily time frame. The indices still had not shifted pace on the 60 minute time frame, even though the daily pace was shifting as expected along the previous highs of the year. Even though I was looking for slightly higher highs this time around before turning lower, I thought that we would see the market break down first and then try another high to create a trap on a daily time frame as well. This was a very typical outcome, but on Thursday the market showed that it had no intention to give up just yet.

Dow Jones Industrial Average ($DJI)


Despite a start to a change of pace intraday on Wednesday afternoon in favor of selling, that pace shifted again afterhours. The indices futures pulled higher off afterhours lows and then formed a high level base after that rally heading into Thursday's opening bell.

When the bell rang it was like a starter pistol had been fired and the market broke the range to the upside. It was an extremely good example of why it can be necessary to double check your previous evening's bias in light of new premarket data. This is particularly true in the midst of earnings season. So far the market has been pleased with the results. Not only did the index futures break higher out of that premarket base, but this also created a breakout from a larger 60 minute triangle that had been forming on the all-sessions charts of the S&P and Dow index futures.

In addition to jobless claims, existing-home sales data was also released on Thursday morning. The National Association of Realtors reported that home sales rose 3.6% in June to an annualized pace of 4.86 million. This is the highest level since October and down only 0.2% compared to June of last year. The market was thrilled and homebuilders rose sharply to break out of high level trading range that had formed throughout most of the session on Wednesday. Pulte Homes (PHM) was up 4.4%. Ryland (RYL) rose 5.7%.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) added 188.03 points, or 2.12%, to close at 9,069.29 on Thursday. The January high had been 9,015. It is now up 3.3% on the year. Despite the huge gains, three Dow components still posted losses. The most significant was McDonald's (MCD), which feel 4.64%. It was followed by a 0.83% loss in Wal-Mart (WMT). Boeing (BA) also posted a loss, albeit minor, and lost 0.12%. The top gainers were 3M (MMM) (+7.36%), Caterpillar (CAT) (+6.73%), DuPont (DD) (+5.90%), Alcoa (AA) (+5.88%), and Disney (DIS) (+5.59%).

The S&P 500 ($SPX) rose 22.22 points, or 2.33%, and closed at 976.29. Ford (F) was one of the best performers in the S&P 500 after it reported an operating loss that was less than had been expected. Crude oil futures jumped from $65.40 a barrel to $67.16 a barrel. Energy shares did well in light of this rally. Chevron (CVX) was up 3%, while Transocean (RIG) ended the session higher by 3.4%.

The Nasdaq Composite ($COMPX) ended up adding another 47.22 points, or 2.45%, and it closed at 1,973.60 on Thursday.

Nasdaq Composite ($COMPX)


Despite the day's gains on Thursday, the market experienced a slap on the face afterhours. Earnings from some big names fell short of expectations. When the index futures began trading again at 16:30 ET the Dow and S&P futures were down 50% off the intraday highs compared to the start of the opening rally, while the Nasdaq futures pushed just past the 62% fibonacci retracement level before the market stabilized and fell into an afterhours trading range along these lows.

After the close Microsoft (MSFT) reported earnings of $0.34 a share for its fiscal 4th quarter with revenue of $13.1 billion. This is down from $0.46 a share last year when revenue was $15.8 billion and it fell short of expectations for $0.36 a share and $14.5 billion in revenue. Amazon.com (AMZN) also posted afterhours earnings with earnings of $0.32 a share and revenue of $4.56 billion. Revenue was up 14.5% from a year ago, but slightly under estimates, while earnings per share was a penny higher. Also contributing to the afterhours decline was American Express. It's revenue was down 18% from a year earlier at $6.09 billion and earned $0.09 a share after earning $0.56 a year earlier. This was quite short of the $0.20 a share analysts had been expecting.

Intraday the pace of the buying was the strongest coming out of the opening bell. The indices continued higher into the final hour of trade, but between the 11:15 ET correction period and the 15:00 ET correction period the upside was only made by very slightly higher highs. This created a change of momentum that helped the market fall apart easily in afterhours trade. The low-level base into midnight following this retracement leaves the market with a bearish bias going into Friday morning. After two strong weeks of upside, with the Nasdaq posting gains for 12 straight sessions, I am again going to be watching for some profit-taking ahead of the weekend.


REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com

Daily Pace Continues to Shift at Year's Highs

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

Good day! The Dow Jones Ind. Ave. lagged behind the Nasdaq Composite on Wednesday, but all three of the major indices continued to push higher throughout the morning and into the early afternoon. The overall pace of gains has also continued to slow on the daily time frame and the market has done a decent job of following through on our expectations for the week. We are seeing the slightly higher highs, but with nowhere near the momentum of last week's buying. The intraday movements were fairly steady throughout the session, holding support and resistance level extremely well on the 5 and 15 minute time frames.

Dow Jones Industrial Average ($DJI)


After breaking back through the 15 minute 20 sma on the upside Tuesday afternoon, this level again served as support throughout the morning rally on Wednesday, particularly in the Dow and S&Ps. The indices hit a third high on a 5 minute time frame intraday just prior to the 13:00 ET correction period. The pace then shifted on the smaller 2 minute time frame into that correction period. That small shift took the indices back into the 15 minute 20 sma support once again, but this time the indices hugged that support before breaking lower out of the 15:00 ET correction period. This type of late-day turnaround is the manifestation of the risk that made taking new positions as multi-day buys on Wednesday ill-advised.

Nevertheless, the momentum on the late-day selling was still not very strong. The Nasdaq even managed to post gains for the 11th straight session. It last performed this feat in September 1996. Technology led the gainers. Starbucks (SBUX) also helped the Nasdaq push higher. In addition to Apple (AAPL), it's earnings factored strongly into the day's gains. SBUX was the strongest of the Nasdaq-100 stocks, up 18.4%. APPL rose 3.5%. The Nasdaq Composite ($COMPX) ended up gaining 10.18 6.91 points, or 0.53%, and it closed at 1,926.38 on Wednesday. I do not believe that this streak will continue into Thursday, however, and am expecting the index to close lower. I am also expecting some rapid intraday selloffs on at least a 5 minute time frame for a more decisive break of the 15 minute 20 period simple moving averages intraday. Microsoft (MSFT) and Amazon.com (AMZN) will be reporting their earnings following Thursday's close.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) fell 34.68 points, or 0.39%, to close at 8,881.23 on Wednesday. Approximately half of the Dow's components posted gains, while the other posted losses. Travelers (TRV) was the biggest gainer, but only by 1.60%. It was followed by a 1.39% gain in General Electric (GE) and a 1.27% gain in Intel (INTC). Coca-Cola (KO) was the biggest loser. It fell 2.42%. Boeing (BA) followed with a loss of 2.37% and American Express (AXP) lost 2.11%.

The S&P 500 ($SPX) fell 0.51 point, or 0.05%, and closed at 954.07. Energy and utility stocks were amongst the weakest sectors and accounted for the S&P's overall relative weakness in comparison to the Nasdaq. Crude oil futures opened lower on the session and were trading under $64 a barrel. They recovered to close the gap, but still finished down by $0.21 a barrel at $65.40.

Nasdaq Composite ($COMPX)


REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com

10th Straight Gain for the Nasdaq

(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 has continued to post new gains as the week wears on, but the upside remains muted as compared to the rallies of the past week. This is the continued change in pace I spoke of late last week. The indices did finally break the 15 minute 20 period simple moving average though. The session began with a gap higher into the opening bell, but the gap closed very quickly. The Dow was the strongest of the three major indices, while the Nasdaq was the weakest. The Dow found support when the 5 minute 20 sma hit, while the S&P 500 hit support at the same time at its 15 minute 20 sma and the Nasdaq hit support at previous 15 minutes lows. These levels hit simultaneously heading into the 10:15 ET correction period.

Dow Jones Industrial Average ($DJI)


This market attempted to recover from the opening decline, creating a "V" formation off the support. This is commonly followed by a longer trading range until the pace within the range shifts to favor a break of that range. In Tuesday's session the pace shifted out of 11:00 ET with volume dropping off. The Nasdaq created a 5 minute Avalanche that led to a strong breakdown out of the range into noon. The Nasdaq had already broken its 15 minute 20 sma, but this move took the Dow and S&P through those levels as well.

The indices then based along lows and pushed to new intraday lows into 13:00 ET, but the bear flag was not well-developed, so the move didn't get far. The indices slid lower as they paced the 5 minute 20 sma. The S&Ps and Nasdaq hit slightly lower lows to create a bear trap with a 2B before pulling higher. The afternoon move continued steadily into the closing bell. This move took the indices back into positive territory by the end of the session.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended the day higher by 69.79 points, or 0.77%, to close at 8,915.94 on Tuesday for the 7th consecutive day of gains. Approximately 2/3 of the Dow's components posted gains. They were led by a 7.67% gain in Caterpillar (CAT) and a 6.12% gain in Merck (MRK). Alcoa (AA) was the biggest loser, down 4.34%.

The S&P 500 ($SPX) gained 3.45 points, or 0.36%, and closed at 954.58. 268 of the S&P 500's index components posted gains. Crude oil continued to inch higher with a gain of $0.74 a barrel to close at $64.72 for the August futures contract. The September contract closed $0.32 higher at $65.61 a barrel.

The Nasdaq Composite ($COMPX) rose 6.91 points, or 0.36%, and it closed at 1,916.20 on Tuesday for the 10th day of consecutive gains despite trading in negative territory for most of the session. The last time the Nasdaq posted 10 straight days of upside was 12 years ago. 60 of the Nasdaq-100's index components posted gains. The market continued higher afterhours following earnings in Apple (AAPL) and Yahoo (YHOO). APPL earned $1.35 a share, up 13.5% from a year earlier. Revenue was up $8.34 billion, which is 11.7% higher than a year ago. Estimates were for earnings of $1.17 a share and revenue of $8.2 billion. AAPL was up strongly afterhours. YHOO earned $0.10 a share, which was comparable to a year ago. It had been expected to earn $0.08 a share. It lowered its guidance for the third quarter and this sent the shares lower afterhours.

Nasdaq Composite ($COMPX)


The market is now at some very strong daily resistance. Both the S&Ps and Dow are hitting previous highs, while the Nasdaq has made approximately an equal move compared to the previous rally from late May to early June. A slightly higher high in the S&Ps and Dow is more likely than a pure double top at this resistance, but at this point the best approach will be to watch for daytrading opportunities in both directions and stay away from new daily buy setups as swingtrades.

REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com

Nasdaq Pushes to New Yearly High

(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 has continued to creep higher into the new week. As I mentioned in yesterday's session, the indices are due for a correction from this most recent run, but the pace of the buying early last week made it more likely that the pace of the upside would slow instead of seeing a sharp pivot off highs on the daily time frame into this week. Monday's action confirmed this bias. Even though the indices posted higher highs, they continued to just step higher on the 15 minute time frame. This meant that the slower ascent that began on Friday continued and that the overall upside momentum has shifted.

Dow Jones Industrial Average ($DJI)


This action can create a rounded high that can result in a more rapid pullback once the uptrend channel breaks. A slower version took place off the June highs heading into the middle of the month. Since this time the ascent is sharper, a rapid reversal would more likely be shorter-lived and followed by another attempt at highs before it could round off better with a larger price correction. If the upper channel from the past several sessions breaks strongly higher, however, and the pace of the buying does not continue to shift, then the extension will have a higher chance to form more of an inverted "V" pattern off highs since the slowdown into this week will have led to a slower overall uptrend.

Currently, even though the overall pace of the trend has slowed, the upside moves within the trend are more rapid than the downside moves. This means that we do not yet have a strong short setup forming on the 15-60 minute time frames yet, but it is exceptionally rare to see the indices hold a trend above the 15 minute 20 sma for more than 3 days. In fact, I can only recall seeing this happen a couple of times. Typically, they hold them no longer than 2.5 days before they are penetrated.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended the session higher by 104.21 points, or 1.19%, to close at 8,848.15 on Monday for the 6th consecutive day of gains. Out of the Dow's 30 index components, only three posted a loss. Bank of America (BAC) was the largest of the three, down 5.04%. Procter & Gamble (PG) fell 0.64%, while Johnson & Johnson (JNJ) fell 0.29%. Caterpillar (CAT) was the biggest gainer ahead of Tuesday's premarket earnings announcement.

The S&P 500 ($SPX) gained 10.75 points, or 1.14%, and closed at 951.13. 431 of the S&P 500's components posted gains. Crude oil futures rose once again to end the session at $63.98 a barrel. After topping $65 intraday, energy stocks were mainly higher on the day. Health care stocks were amongst the laggards.

The Nasdaq Composite ($COMPX) rose 22.68 points, or 1.20%, and it closed at 1,909.29 on Monday for the 9th day of consecutive gains. 85 of the Nasdaq-100's components posted gains. The Nasdaq has not managed to post 9 straight days of gains since July 1998. The index is now up 50.5% off the March lows, recovering half the losses made since the index peaked last year. Apple (AAPL) reports earnings on Tuesday.

In the currency market, the U.S. Dollar ended the day lower, as did interest rates. Fed Chairman Ben Bernanke will be testifying before Congress on Tuesday and he is expected to reconfirm economic weakness. Although his testimony will be widely watched, the week is relatively light on economic data, so most of the eyes will be on earnings.

Updates from Friday's column: The USD/EEK is continuing to form a weekly bear flag and the USD/LVL has been doing so as well. Meanwhile, the NZD/USD is forming a base along highs on the weekly time frame with an upside bias for a breakout. I would have preferred to see a slower correction along the current high to extend the base for a third correction off daily highs in the range before the pair broke higher to help it sustain a larger move, but it broke free on Monday. It has resistance at last October's highs. The EUR/USD has a similar formation, which, if it triggers, will be the third wave higher on the weekly time frame since the early-March lows. Resistance will hit at December highs.

Nasdaq Composite ($COMPX)


REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com.

Exceptional Week on Wall Street

Exceptional Week on Wall Street

(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 managed some very impressive gains this past week. Most of the gains were made on Monday and Wednesday, with corrective action in between. The market still had room on Friday to push higher, but as I mentioned in the day's column, I was concerned that after a very strong week already that a number of market participants would be interested in protecting some gains before the weekend and the coming week, which is a busy one on the earnings front. I do believe that we did see some of this in Friday's session because attempts to push higher intraday did not make it very far despite the added room to move.

Dow Jones Industrial Average ($DJI)


Friday's session began in a very similar manner as the day before. The indices immediately fell into a narrowing trading range, forming a wedge throughout the morning and into the early afternoon. The initial move within that wedge was the opposite of Thursday's open, however, due to selling out of the open as opposed to buying. The 15 minute 20 period simple moving average continued to serve as strong support and held throughout the session. As on Thursday, the second pullback off highs within the range shifted the pace within the wedge. This was confirmed by the third move off highs into the early afternoon and the market easily broke to new intraday highs following that final intra-wedge correction.

Although the indices moved sharply higher out of the wedge, the move was unable to sustain itself to the same degree as Thursday's wedge breakout. By 14:00 ET the indices were pulling back off highs. This was a strong pullback in the Dow and S&Ps into the 5 minute 20 sma support. The Nasdaq had a more gradual pullback, but all three indices hugged the 5 minute 20 sma to form Avalanche™ short setups on the 5 minute time frame. The follow through established a two-wave correction on the 15 minute time frame and the support from the wedge held, leading to a final bounce into the closing bell, but it was not enough to bring the indices to new highs once again. All three indices fell just a hair short.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended the session higher by 32.12 points, or 0.37%, to close at 8,743.94 on Friday. This was the first time since July 2007 that the Dow has posted gains for 5 consecutive sessions. Despite the overall index gains, just over 50% of the Dow's 30 index components posted losses for the day. They were led by a 6.05% decline in General Electric (GE). The next biggest loser was Bank of America (BAC) (-2.13%), followed by Alcoa (AA) (-2.11%). The gainers were led by IBM (IBM) (+4.32%), which played a major role in the Dow's ability to post a gain thanks to its quarterly results and a bullish guidance. JP Morgan (JPM) (+2.10%) and Cisco (CSCO) (+1.94%) followed. The index ended the week higher by 7.3%.

The S&P 500 ($SPX) lost 0.36 point, or 0.04%, and closed at 940.38. Crude oil futures rose 2.5% to $63.56 a barrel. Energy shares followed its lead, but it wasn't enough to push the S&Ps to its 5th consecutive daily gain. Only about 2/5 of the S&P's index components posted gains. The S&P 500 still ended the week higher by 6.9%.

The Nasdaq Composite ($COMPX) rose 2.58 points, or 0.08%, and it closed at 1,886.61 on Friday. Even though the gain was tiny, it was the 8th straight gain in the Nasdaq and the first time this has happened since May 2004. 56 of the Nasdaq-100's index components posted gains. Yahoo (YHOO) rose 4%, while Apple (AAPL) gained 2.9%. On the other hand, Google (GOOG) fell 2.8%. The Nasdaq ended the week higher by 7.4%.

In the currency market, the U.S. Dollar ended the week lower against all the major currencies other than the Japanese Yen. This coming week is relatively light on economic data, so most of the eyes will be on earnings. The USD/EEK is forming a weekly bear flag and the USD/LVL is attempting to as well. Although I was looking at support for a correction off lows several weeks ago, these two pairs have so far been correcting not through price, but through time. Meanwhile, the NZD/USD is forming a base along highs on the weekly time frame with an upside bias for a breakout. I would like to see a slower correction along the current high to extend the base for a third correction off daily highs in the range before the pair breaks higher to help it sustain a larger move, but it does not have resistance again until last October's highs. The EUR/USD has a similar formation, which, if it triggers, will be the third wave higher on the weekly time frame since the early-March lows. Resistance will hit at December highs.

Nasdaq Composite ($COMPX)


Last week's gains were the best the market has seen since March, but the volume was light throughout the week, even when the upside was at its strongest. Just under 700 companies will be reporting quarterly earnings this coming week. Among them are Apple (AAPL), Boeing (BA), Freeport-McMoran Copper & Gold (FCX), McDonald's (MCD), Merck (MRK), and Microsoft (MSFT). The main thing the market will be watching for is the revenue reported, since most companies are expected to meet or beat estimates at this point. Given that the market has not had a multi-day run like this in years, the odds favor a correction to this past week's rally during the new trading week. The pace of the upside will make a pivot or rapid daily price pullback high less likely than a slowdown in upside momentum and a shift in pace for a correction over the course of the week.

REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course at http://www.tradertoni.com.

Economic Reports and Events This Week

Economic Reports and Events This Week

Monday, July 20, 2009
10:00 a.m. June Conference Board Leading Indicators: Previous: +1.2%.

Tuesday, July 21, 2009
7:45 a.m. ICSC Chain Store Sales Index For July 18:
8:55 a.m. Redbook Retail Sales Index For July 18:
5:00 p.m. ABC/Wash Post Consumer Conf For July 18:

Wednesday, July 22, 2009
No economic events are scheduled for today.

Thursday, July 23, 2009
8:30 a.m. Initial Jobless Claims For July 18 Week:
10:00 a.m. July Philadelphia Fed Business Index: Previous: -2.2.
10:00 a.m. July Existing Home Sales: Previous: +2.4%.
10:00 a.m. DJ-BTMU Business Barometer For July 11:

Friday, July 24, 2009
10:00 a.m. End-July Reuters/U Mich Sentiment Index: Previous: 70.8.



Key Earnings Announcements This Week:

Friday, July 17, 2009
Before: AOS, ACO (?), BMI, BAC, BBT, C, FHN, GE, MI, MAT, PRSP, WBS
After: -

Monday, July 20, 2009
Before: ASTE, CRNT, ETN, HAL, HAS, JCI, MTB, ZEUS (?), PETS, SXT, WFT
After: MDRX, BSX, BRO, CACH, CNI, EDR, EW, ELS, FWRD, HXL (?), HOKU (?), ICUI, IEX, JDAS, LM, LNCR (?), PKG, RLI, SY, TXN, VLTR, WERN, ZION

Tuesday, July 21, 2009
Before: AKS, ARB, ALV (?), BJS, BLK, BEAT (?), CAT, KO, CMA, CAL, DD, ELN, FCFS, FRX, HCBK, ITW, JEF, JRN, KCI, LAB, LXK, LMT, MRK, MICC, NEOG, EDU, ORB (?), PCAR (?), BTU, PNR, PCP, DGX, RF, SGP, SHW, LUV, STT, AMTS, UAUA, UTX, UNH, WU
After: AAN, AMD, ALGT, AMLN, AAPL (?), ATHR, BXP, CHRW, CRI (?), CHIC, CNH, EPIQ (?), FULT, GILD, HBHC, IBKC, ILMN, INFN, LLTC, MANH, MRTN, NBR, PTV, PNFP, PTP, PPDI, QLGC, RCRC, RHI, STX, SLM, SFG, SBUX, STLD (?), SYK, SUPX, VFC, VOCS (?), WCN, WSII, YHOO

Wednesday, July 22, 2009
Before: AMG (?), APD, AAI, ATI, MO, ABFS, ATMI, BK, BA, CSL, CFR, DAL, DPZ, LLY, ENTG, GNTX, GENZ, HST, ICLR, IGTE, IMN, KEY, NITE, LII, MEG, MKSI, MNTA (?), MS, NCI, NTRS, NWPX (?), NVR, ODFL, PEP, PFE, PTEC, PJC, PDS, RIMG, SEIC (?), SLGN, STJ, SWK, SU, STI, TCB, MDCO (?), TNB (?), USB, USG, WFC, WHR, WIT
During: EGN, SUSQ
After: AATI, AFFX, ALB, ACL, ADS, DOX, BIDU (?), BXS, BCR, CMG, CRUS, CTXS, CNS, COHU, CPTS, CLB, EXBD (?), CSGP, CVA, CYMI, DRH (?), DST, ETFC, EBAY, EFX, EQIX, RE (?), FFIV, FIC, GGG, HUBG, ISIL, ISRG, IRBT, JAH, KNX (?), LHO, LOGI, MLNX, MCRI, MOS, MTSC, NTGR, NFX, NE, NVEC, OMTR, OSIP, PSSI, QCOM, QDEL, RJF, RUSHA, SNDK, SKX (?), SWKS, TEX, TSCO, TQNT, TBI, TUP, VASC, VMW, WLT

Thursday, July 23, 2009
Before: MMM, ALK, ALXN, ACAT (?), T, AUO, BLL, BMY, BG, CCMP, CSH, CELG, CBR (?), CIT, CME, SUR (?), CMCO, CVG (?), CBE, CVH (?), DHR, DLX, DO, DHX, DDE (?), DVD (?), DSPG, EXP, EMC, EMCI, ECA, ESV, ETH (?), EXC (?), FITB, FCF, FLIR, F (?), GMT, GR, GRC (?), HSY, HUB.B (?), HBAN, RX (?), IPCC (?), IDC, IGT, IVC (?), ESI, JAKK (?), JBLU, KBW (?), KMB, FSTR (?), LLL, LH (?), LTM (?), MAN, MCS (?), MCD (?), MV, MNRO, MOG.A (?), NYT, NEM, NIHD, NCX (?), NUE, OXY, ORI, OMC, PTI (?), PENN (?), PFCB (?), PM, PNC, POT, PLD, PFS, RSH (?), RRC (?), RTN, RGC (?), RS, RAI, RTIX (?), R (?), SWY, SCHL, POOL, SIAL, SPAR, SPF, HOT, SYNT (?), TROW (?), TASR (?), TDY, TIN, TRA, SNAK, TMO, TRAD (?), UTEK, UNP, UPS, LCC, VDSI, VTNC, VNO (?), WSO, WCC, WTNY, WYE, XRX, ZMH, ZOLL (?)
During:
After: ABAX (?), ACTG (?), AEA (?), AEIS, AFL (?), ARG, ALGN, AMZN, AXP, AMP, AMSG, AVID, AVCT, BJRI (?), BRCM, BUCY, BLDR, BNI, CA, COG, COF, CEC (?), CLS (?), CENX, CHRT, CAKE, CB, CYN, CPWR, CNW, CYBS, DDUP, DECK, DDR, DGII, EMN, ESIO, WIRE (?), EZPW, FII, GDI (?), GPN, HWAY, HITT, BLUD, INFA, INSU, IBKR, IFSIA (?), XXIA (?), JJSF, JNPR, KLAC, LCRD (?), LSCC, LEG, WFR, MTD (?), MCRL, MCHP (?), MSCC (?), MSFT, MTX, NARA, NATI, NFLX, NTCT, NTRI, NUVA, OMCL (?), PCTI, PKI (?), PMCS, PGI, QCOR (?), RMBS (?), RFMD, RVBD, SGMO (?), SWIR (?), SIMG (?), SNWL, SONO (?), STAR, SRCL (?), STSA, SPWRA, SRDX (?), SNV, TCO, TZOO (?), WOOF, VISN (?), WRE, WGOV

Friday, July 24, 2009
Before: AXL (?), ACI, ASH, BDK, DOV, FO, GAP (?), IDXX, IR, LNCE, ERIC, NTY (?), OXPS, SAIA, SLB,
After: EEP

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

Market Continues to Rally

Market Continues to Rally

(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 opened slightly lower on Thursday morning following the day's unemployment data. First-time unemployment benefits fell 47,000 last week to 522,000. This is the lowest level since January. The gap was minor and filled relatively quickly. At 10:00 am ET, however, the market fell back more quickly. A nearly textbook trading range followed. As I warned yesterday, the bears had difficultly gaining any traction and the market held up very well. The second wave of pullback action off highs into the 15 minute 20 sma support held lows around 11:30 ET, but since this pullback was near the previous 5 minute lows, the market was not able to easily break the day's highs quite yet.

Dow Jones Industrial Average ($DJI)


A change in pace over noon, however, did allow for such a move. From 12:00 ET into 13:30 ET the indices slowly retraced the previous gain on the 5 minute time frame as it hugged the upper end of the triangle it was forming intraday. This, along with a decline in volume, favored an upside resolution to the correction. This came at 13:30 ET and confirmed when the volume began to increase once the day's highs were breached.

When the indices broke higher on Thursday afternoon, the breakout was a steady one that lasted nearly into the closing bell. This breakout actually triggered a third move higher on the intraday time frames on a 60 minute chart. You can see this on the chart of the ES shown below. The market didn't stop until the indices were testing the next resistance levels I posted on the daily charts yesterday. This was a channel break in the S&Ps and Dow and the prior daily highs on the Nasdaq.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended the session higher by 95.67 points, or 1.11%, to close at 8,711.82 on Thursday. Only 4 of the Dow's 20 index components lost ground on Thursday. Bank of America (BAC) fell 1.86%, while AT&T lost 1.08%. The biggest gainers were American Express (AXP) with a gain of 3.89% and IBM (IBM) with a gain of 3.19%. JP Morgan (JPM) also fell slightly after it reported earnings ahead of the open. Afterhours, IBM reported earnings of $2.32 a share and it raised its guidance for the year. IBM was trading higher following the news.

The S&P 500 ($SPX) gained 8.06 points, or 0.86%, and closed at 940.74. Energy, materials, and information technology fronted the gainers, which financials struggled. Crude oil closed higher by 0.8% at $62.02 a barrel. Gold futures closed lower by 0.4% at $935.40 per ounce.

The Nasdaq Composite ($COMPX) rose 22.13 points, or 1.19%, and it closed at 1,885.03 on Thursday. Among the strongest stocks were Qualcomm (QCOM), eBay (EBAY), and Intel (INTC). Google (GOOG) fell afterhours when it reported an earnings of $5.36 a share excluding one-time items.

In the currency market, the dollar fell against most of the major currency counterparts on the heels of a global stock market rally on Thursday. The USD/EEK is forming a weekly bear flag and the USD/LVL is attempting to as well. Although I was looking at support for a correction off lows several weeks ago, these two pairs have so far been correcting not through price, but through time. Meanwhile, the NZD/USD is forming a base along highs on the weekly time frame with an upside bias for a breakout. I would like to see a slower correction along the current high to extend the base for a third correction off daily highs in the range before the pair breaks higher to help it sustain a larger move, but it does not have resistance again until last October's highs.

Nasdaq Composite ($COMPX)


The market is becoming extended on this current 60 minute rally, but there is still a bit of room before this third wave of upside on the 60 minute time frame, as seen on the ES, hits a move equal to the previous rally. This will be approximately the zone of the prior daily highs in the S&Ps and Dow. As in the past several days, I will once again remain more cautious on the short side, but tomorrow can easily be a turn-around day. Due to the extent of the week's rally, there is a very good chance of profit-taking ahead of the weekend.

REMEMBER: Don't forget to check the earnings schedule heading into Friday's session, since the reporting companies will be some of the biggest movers.

You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course, which I made available at a substantial discount this week as a special "earnings season kick-off". It's 7 hours showing gap strategies from start to finish and includes my latest Market Timing Guide. This guide details my favorite trading strategies with specific entry and exit guidelines. You can access this course today for 50% off its regular price by clicking on the following URL:
http://www.tonihansen.com/gaptrading/order149.html.
This special is only available until midnight eastern on Friday night.

Q2 Earnings Met With Enthusiasm

Q2 Earnings Met With Enthusiasm

(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 "tickled pink" by Intel's earnings surprise on Tuesday after the bell. The chip-maker not only posted better-than-expected earnings, but it also raised its third quarter sales forecast. This busted the index futures higher when they opened again for trade at 16:30 pm ET on Tuesday evening. Once the foreign markets began to open on Wednesday morning the index futures again began to climb, albeit slowly at first.

At 8:30 am ET the Consumer Price Index report was released. It came in ahead of expectations with an increase of 0.7% in June. Economists had anticipated a 0.6% increase. Meanwhile, the Core CPI increased 0.2%, which was greater than the 0.1% that had been anticipated. Additionally, the New York/Empire State Manufacturing Index for July came in at -0.55. This was a lot better than the -5.00 that had been expected. It had hit -9.41 in June.

The market did not immediately show a strong reaction to this economic data, but the index futures had fallen into a narrowing triangle at this point as they based into the 200 period simple moving average on the all-sessions time frame. The formation was a positive one and reacted to the support level by breaking higher out of 9:30 am ET with a rally that continued sharply higher into the opening bell.

Dow Jones Industrial Average ($DJI)


The market paused in its ascent when the 9:45 ET correction period hit and the indices pulled back before continuing higher at 10:15 ET. A third upside wave followed out of 11:00 ET and extended the morning trend, but this mere extension did not deter the bulls. Even though the indices had now hit equal move resistance on a 60 minute time frame, a clear two-wave base can be seen in the indices mid-day, particularly on a 5 minute chart of the Nasdaq. This was enough of a rest to let the uptrend channel break following the third push on the 5 minute time frame, while at the same time creating another strong buy setup. It triggered a buy between 13:20-13:30 ET and the indices once again moved effortlessly to new intraday highs. What's more, the indices didn't stop there. They continued higher with strong momentum into the final hour of trade and closed just off the day's highs.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) ended the session higher by a whopping 256.71 points, or 3.07%, to close at 8,616.21 on Wednesday. The gains were led by American Express (AXP), which closed higher by 11.28%. It was followed by a 7.25% gain in Intel (INTC) and a 5.98% gain in Caterpillar (CAT). Surprisingly, not all of the Dow's 30 index components posted gains. McDonald's (MCD) trailed with a loss of 0.66%, despite the fact that I am in love with their McCafe hazelnut lattes (sorry Starbucks!)

The S&P 500 ($SPX) gained 26.84 points, or 2.96%, and closed at 932.68. The greatest strength was in the semiconductors, consumer finance, diversified metals and miners, casinos and gaming, and construction and engineering. On the weak side were managed health care and restaurants. Crude oil was up in premarket and broke higher again soon after 11:00 am ET. It ended the session higher by 3.4% at $61.51 a barrel.

The Nasdaq Composite ($COMPX) rose 63.17 points, or 3.51%, and it closed at 1,862.90 on Wednesday. The tech stocks were naturally cheered by Intel's results and most posted gains. Research In Motion (RIMM) posted a gain of 6%, Cisco (CSC) rallied 5.77%, and Microsoft (MSFT) was up 4.37%. Only 5 of the Nasdaq-100's index components posted losses. The main one was Hunt J B Trans Svcs (JBHT) with a loss of 9.79%.

Nasdaq Composite ($COMPX)


As you can see, the market easily held its pace from earlier this week and had no difficultly testing the zone of the previous daily high on Wednesday. This is a strong price resistance level, but the momentum into this level means that the bias I had going into earnings season has shifted and we can easily see a retest of the highs. I am not currently expecting a strong break of the June highs, however, since we still have not had a decent weekly correction. Nevertheless, for the next couple of days it will still likely remain difficult for the bears to even gain decent traction on the intraday time frames.

REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers.

You can learn more on how to trade these stocks through my Mastering Momentum Gaps in-depth course, which I made available at a substantial discount this week as a special "earnings season kick-off". It's 7 hours showing gap strategies from start to finish and includes my latest Market Timing Guide. This guide details my favorite trading strategies with specific entry and exit guidelines. You can access this course today for 50% off its regular price by clicking on the following URL:
http://www.tonihansen.com/gaptrading/order149.html.

Market Trades in Range Intraday, Then Busts Higher Afterhours

Market Trades in Range Intraday, Then Busts Higher Afterhours

(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! Tuesday was a rather slow day for the market after the strong rally on Monday. A lot of eyes were on Goldman Sachs (GS) heading into the open. It reported its quarterly earnings and was expected to do well. It did not disappoint. Revenue climbed 47% from a year ago and beat analyst estimates. GS hit equal move resistance on a 30 minute time frame into the open, however, after rallying strongly the day before and it closed with nearly no change on the day.

In addition to earnings season kicking into full gear, the market had a few big economic reports to contend with. On Tuesday morning the Commerce Department reported that retail sales rose 0.6% last month, up from the 0.4% increase that had been expected. Excluding autos and gas, however, retail sales fell 0.2%. This was the fourth consecutive monthly loss. Meanwhile, inventories fell for the 9th straight month by 1% and business sales fell 0.1% in May. Year-over-year sales are down 17.8%. In additional news, the Labor Department reported that the U.S. producer prices rose 1.8% in June. A gain of 1.2% had been expected. Excluding food and energy, prices were up 0.5%.

Dow Jones Industrial Average ($DJI)


The market had ran so far the previous day that it was difficult to extend that type of momentum into Tuesday and the major indices traded primarily in a range throughout the session. There were still some decent swings back and forth on a 5 minute time frame, although both the opening action and the late afternoon action was choppy.

When the market opened, the indices swung higher for a few minutes before selling off into approximately 10:00 am ET. The selling was sharp initially, but slowed as the indices approached their 15 minute 20 period simple moving averages and the S&Ps and Dow came into support at their 5 minute 20 sma support. The market then bounced quickly higher, but the move was short-lived and a triangle formed on the 5 minute time frames that broke lower into 10:30 ET. Notice how light the volume became just prior to the range breaking. This was a heads-up that such a break was imminent.

S&P 500 ($SPX)


The selling didn't get very far. Even though the pace was strong, previous congestion and support hit at the 10:45 ET correction period and the indices bounced back to the day's highs. When a "V" forms like this, the general progression is into a longer trading range. The indices rolled over at morning highs out of the 12:00 ET correction period and fell quickly back to the middle of the range, but from that point onward the action became more sloppy.

A 15 minute Avalanche attempted to form and trigger into 14:00 ET, but it only managed a brief move lower before pulling back up into the narrower early-afternoon range and then higher again for another test of the day's highs. This type of action had a lot to do with the upside extension on the 60 minute time frame heading into Tuesday. Instead of being able to formulate a decent intraday trend bias, the market corrected through time, holding the 15 minute 20 sma zone as it did so.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) ended the session higher by 27.81 points, or 0.33%, to close at 8,359.49 on Tuesday.About 2/3 of the Dow's 30 index components posted gains. They were led by Home Depot (HD) with a gain of 2.47%, followed by a pre-earnings rally in Intel (INTC) of 2.06%. The two largest losers were Travelers (TRV) (-2.13%) and AT&T (T) (-1.35%).

The S&P 500 ($SPX) gained 4.79 points, or 0.53%, and closed at 905.84. Although crude oil opened higher on the day and was up as much as $61.46 a barrel, by the time the market closed it was near the day's lows at $59.52 a barrel. Nevertheless, oil-related stocks still posted gains overall and closed near their intraday highs.

The Nasdaq Composite ($COMPX) rose 6.53 points, or 0.36%, and it closed at 1,799.73 on Tuesday. Dell (DELL) was the biggest loser in the Nasdaq-100, down 8.06%. Flextronics (FLEX) was the biggest gainer with a 5.3% increase, followed by Wynn Resorts (WYNN) up 4.61%. The biggest news for the indices didn't come until after the close when Intel (INTC) posted a surprise earnings report of 18 cents a share despite a hefty fine imposed by the European Union. Intel had been expected to earn 8 cents a share. INTC, as well as the three major indices, jumped sharply higher afterhours.

The afterhours rally took the index futures to their upper trend channel resistance. This resistance level can be shown by connecting the previous two daily highs and extending that upper channel downwards. The continuation of Monday's upside means that the pace has solidly shifted on the 60 minute time frame. To sustain the upside on a larger weekly time frame to lead to a new weekly high, it would be best to see the market push back into the previous high zone from late June before correcting from the buying on the daily time frame and then pushing higher. Without the almost immediate continuation of this week's strength, the pace can still easily shift again back in favor of the bears. With earnings season ongoing, this momentum bias can be easily swayed. As in yesterday's session, I do not want to be too aggressive on the short side at this point.

REMEMBER: Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers.

Company Upgrades & Falling Gas Prices Help Market Rally

Company Upgrades & Falling Gas Prices Help Market Rally

(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 a very lack-luster week last week, the market managed to recover strongly on Monday morning. As I mentioned in yesterday's column, the S&P 500 and Dow Jones Industrial Average attempted to trigger a 15 minute Phoenix ™ buy setup last Friday afternoon after they hugged the 15 minute 20 period simple moving average throughout most of the afternoon following a mid-day rally. They failed to confirm the setup, however, by the end of the trading week. The breakout attempt on Friday afternoon took place on light volume and the indices were unable to clear the day's highs. In fact, they pulled back again into the close and this pullback continued into Sunday's trade in the index futures.

Dow Jones Industrial Average ($DJI)


The index futures began to turn around once again, however, out of the 2:00 am ET correction period Monday morning. The pace of the selling on Sunday evening slowed and the futures rounded off at lows into the early morning hours. The rally continued to build on itself until 8:45 am ET. Price resistance hit at that point and a correction began with the index futures pulling back off highs. This correction continued into the 10:15 ET correction period, but the 15 minute 20 sma held in the Dow and the zone of Friday's lows held in the Nasdaq. The market formed a solid "V" bottom off these support levels and rallied throughout the remainder of the session, although the majoring of that rally took place before noon. The remainder of the afternoon was spent holding onto the 5 minute 20 period simple moving average zone while the indices stair-stepped higher into the close.

A lot of the boost was attributed to several upgrades, as well as falling gasoline prices. Goldman Sachs (GS) was among those upgraded and the rest of the financials surged. Goldman Sachs will report earnings on Tuesday, so it will depend a great deal upon that data as to whether or not the financials can hang onto Monday's gains. JP Morgan (JPM) follows on Thursday with its own earnings report, and Bank of American (BAC) and Citigroup (C) will be releasing their results on Friday. These four names have a huge sway over the overall market and should be expected to cause strong swings on 5-15 minute time frames following their earnings announcements.

S&P 500 ($SPX)


Best Buy (BBY) also received an upgrade on Monday morning. It gapped sharply higher on the news, pulled back slightly into 10:15 ET, and then crept higher once again into mid-afternoon. The stock had hit its 200 day sma zone early last week. It has corrected off highs in April for approximately the same amount of time as its base along the highs at the beginning of the year just under $30 a share before it broke strongly to the upside to hit the $40 zone in April. Since then it has had two waves of correction and does have the room at this point to establish a second upswing on the weekly time frame.

This recent upgrade could be just the boost it needed to kick off that larger wave of buying. It will have to contend with the 10, 20, 50, and 100 day simple moving averages overhead, but as long as the upside momentum on the 60 minute time frame continues to remain stronger than the pullbacks on the same time frame then those levels should break fairly easily. This would confirm the larger weekly bull flag. Due to the fact that this bull flag has corrected more in price than the base at the start of the year, the follow-through, however, will not likely be as strong as the March-April rally. $45 will be strong price resistance. It is currently trading in the zone of $34/share.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rallied 185.16 points, or 2.27%, to close at 8,331.68 on Monday. All 30 of the Dow's 30 index components posted gains on the day. They were led by a 9.34% rally in Bank of America (BAC) and a 7.33% gain in JP Morgan. General Electric (GE) followed with a 6.31% gain, while American Express (AXP) rose 5.60%. The weakest names were Hewlett Packard (HPQ), McDonald's (MCD), and WalMart (WMT).

The S&P 500 ($SPX) gained 21.92 points, or 2.49%, and closed at 901.05. The financials were also the primary leaders in the S&P 500. Out of the 20 best performers, 17 were financial stocks. CIT Group (CIT) was a major exception. It fell 10.5%. Crude oil was relatively unchanged on Monday. OIL hit the 100 day simple moving average zone we had been following as a major support level and it has been rounding off at that zone. We will likely see a correction to the selloff coming out of this support level. The pace of the move into the support itself, however, is going to make it more difficult to break through upside resistance, such as the 10 and 20 day simple moving averages. Crude ended the session on Monday at $59.69 a barrel with an intraday low of $58.32. Despite crude's performance, energy stocks were largely higher.

The Nasdaq Composite ($COMPX) rose 37.18 points, or 2.12%, and it closed at 1,793.21 on Monday.A major contender to watch out for in the Nasdaq this week will be Google's (GOOG) quarterly earnings report on Thursday. Before that, however, is Intel's (INTC) earnings due out today.

Monday's news shifted the pace of price action in the market. This is going to make for an interesting week ahead, because it will be difficult to maintain such a pace, but at the same time, it could be enough to trigger a larger change in pace that might lead to one more test of the weekly highs with the indices continuing to round off at the weekly resistance levels. This is going to depend upon whether or not the market can hold onto Monday's gains over the next two days. Any strong turn lower once again will keep the indices within a larger channel on the 60 minute charts while it forms a bear flag just over the 100 day sma in the S&Ps and Dow and just under the 50 day sma in the Nasdaq. The upside move was substantially stronger than the previous selling, however, so I don't want to be too aggressive on the short side heading into the middle of the week.

Don't forget to check the earnings schedule this week, since the reporting companies will be some of the biggest movers. You can learn more on how to trade these stocks through my Mastering Momentum Gaps course, which I made available at a substantial discount this week as a special "earnings season kick-off" at http://www.tonihansen.com/gaptrading/order149.html.

In addition to the earnings news this week, on Tuesday the Commerce Department will report June's retail sales numbers. Then on Wednesday the Labor Department will be releasing the most recent consumer prices data. Rising gasoline prices last month are expected to have a decent impact upon this data.

Choppy Action Continues Into Weekend

Choppy Action Continues Into Weekend

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


Good day! We weren't expecting a lot going into Friday's trading session, so luckily we weren't disappointed! As suspected, the indices remained rather range-bound throughout most of the session and they ended the session relatively unchanged yet again. Volume has also continued to remain light compared to recent months. Nevertheless, the session did have a couple of decent intraday moves for traders that focus on 5-10 minute time frames or less.

Dow Jones Industrial Average ($DJI)


Friday's session began with another minor gap, much like the day before, but this time it was a downside gap. The opening price level was at support on a 15 minute time frame. The Nasdaq futures opened at approximately the same level as Thursday's lows and the gap in the indices closed very quickly as the market bounced off these levels. The S&P and Dow continued higher throughout the first 15 minutes of the day until running into strong resistance at the 15 minute 20 period simple moving averages. This was the same zone as the 5 minute 20 sma and hit coming out of the 9:45 ET correction period.

Typically a sharp move higher like the one out of Friday's open will have a difficult time pulling quickly back in the opposite direction. When it does occur, which was the case on Friday, then the odds favor a trading range with another bounce before a bias for a range break can emerge.

Typically this bias results from a shift in the pace or momentum of the moves with the trading range. This shift took place on Friday coming out of the 10:45 ET correction period and led to a breakdown that gained momentum out of 11-11:15 ET. This move continued into previous 15 minute support at 11:30. The pace then shifted once again on the 1 minute time frame and the market managed a nice bounce.

The pace of the bounce created higher odds once again for another trading range since the move retraced more than 50% of the previous decline and was average-paced. This time around, however, it formed on a 15 minute time frame instead of a 5 minute one. Even though the market attempted to change pace by hugging the 15 minute 20 sma within this congestion, the base along that resistance failed to establish a second low and the early trigger on a break higher failed to gain much interest.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) fell 36.65 points, or 0.45%, to close at 8,146.52 on Friday. About 2/3 of the Dow's 30 index components posted losses despite the relatively unchanged close. The downside was led by JP Morgan (JPM) (-3.81%), followed by Chevron (CVX) (-2.66%), and Merck (MRK) (-2.07%). The top gainer was American Express (AXP) (+1.84%). It was followed by Alcoa (AA) (+1.19%) and 3M (MMM) (+1.18%). For the week as a whole the Dow fell 1.6% with its 4th consecutive weekly decline.

The S&P 500 ($SPX) fell 3.55 points, or 0.40%, and closed at 879.13. The S&P 500 fell 1.9% for the week with crude oil futures closing under $60 a barrel at $59.89. Crude has fallen 14.31% so far this month, but remain higher by 34.28 YTD. It had been up as much as 63% just four weeks earlier.

The Nasdaq Composite ($COMPX) rose 3.48 points, or 0.320%, and it closed at 1,756.03 on Friday. The Nasdaq ended the week down 2.6%. Apple (AAPL), Qualcomm (QCOM), and Cisco (CSCO) helped the Nasdaq post a gain.

Nasdaq Composite ($COMPX)


The market doesn't have a strong bias on a 60 minute time frame at this point, although the indices are trying to create a 2-wave short pattern. There is some room to move should it trigger early this week. The 100 day simple moving average in the Dow and S&Ps is just below and would serve as a strong support level to lead to a larger daily bounce, but it's still possible that the market just pulls higher with choppy trade into the 20 and 10 day simple moving averages before breaking down again. It will depend a lot upon whether the pace shifts on that 60 minute time frame or not. A slower and narrow sideways base can more quickly lead to a breakdown as opposed to one with a wider range and better upside action. The weekly charts continue to favor a longer correction off last month's highs.

There are a couple of big names set to report this week as earnings season speeds up. On Tuesday, Intel (INTC) reports its second-quarter earnings. Google (GOOG) is set to report on Thursday. A number of financial companies will also be reporting this week. This includes Goldman Sachs (GS) on Tuesday, JP Morgan (JPM) on Thursday, and Bank of American (BAC) and Citigroup (C) on Friday. Additionally, IBM reports on Thursday and General Electric (GE) reports on Friday. A couple of key economic reports are also due out this week. On Tuesday the Commerce Department will report June's retail sales numbers. Then on Wednesday the Labor Department will be releasing the most recent consumer prices data. Rising gasoline prices last month are expected to have a decent impact upon this data.

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, July 13, 2009
2:00 p.m. June Federal Budget Balance: Previous: -$189.65B.

Tuesday, July 14, 2009
7:45 a.m. ICSC Chain Store Sales Index For July 11 Previous: +0.1%.
8:30 a.m. June Producer Price Index: Previous: +0.2%.
8:30 a.m. June Producer Price Index,ex-food & energy: -0.1%.
8:30 a.m. June Retail Sales: Previous: +0.5%.
8:30 a.m. June Retail Sales, ex-autos: Previous: +0.5%.
8:55 a.m. Redbook Retail Sales Index For July 11 Previous: -4.2%.
10:00 a.m. May Business Inventories: Previous: -1.1%.
4:30 p.m. Jul 10 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For July 11 Previous: -52.

Wednesday, July 15, 2009
8:30 a.m. June Consumer Price Index: Previous: +0.1%.
8:30 a.m. June Consumer Price Index, ex-food energy: Previous: +0.1%.
8:30 a.m. July Empire State Fed Manufacturing Survey: Previous: -9.41.
9:15 a.m. June Industrial Production: -1.1%.
9:15 a.m. June Capacity Utilization: Previous: 68.3%.
10:30 a.m. Jul 10 US Energy Dept Oil Inventories
2:00 p.m. Federal Reserve FOMC Minutes

Thursday, July 16, 2009
8:30 a.m. Initial Jobless Claims For July 11 Week Previous: -52K.
9:00 a.m. May Tsy International Capital: Previous: -$53.2B.
10:00 a.m. DJ-BTMU Business Barometer For July 3 Previous: +0.8%.
10:30 a.m. Jul 3 EIA Natl Gas Inventories, in billion cubic feet
1:00 p.m. July NAHB Housing Index: Previous: 15.

Friday, July 17, 2009
8:30 a.m. June Housing Starts: Previous: +17.2%.

Key Earnings Announcements This Week:

Monday, July 13, 2009
Before: FAST
After: CSX, ELS (?), NVLS

Tuesday, July 14, 2009
Before: GS, HITK, JNJ
After: AIR, ADTN, ALTR, HCGS (?), INTC, YUM

Wednesday, July 15, 2009
Before: ABT, AMR (?), ASML, SCHW (?), CBSH, GCI, NITE (?), LUFK, MTOX, TXI, WWW, WOR, GWW
After: CTAS, CCK, EWBC, JBHT (?), JMP (?), LSTR, PLCM, RECN, SGK (?), STLY, NCTY (?), UFPI, XLNX

Thursday, July 16, 2009
Before: APH, BAX, BIIB, BLK (?), CY, FCS, GPC, GAP (?), HOG, IIIN, JPM, KNL, MAR, MBFI, VIVO (?), MTG, NXY, NOK, ORB (?), PII, BPOP (?), PPG, SXT (?), SON, UMPQ, USAK, WSO (?)
During: ASBC
After: ANGO, ATR, CBST, CYT, ESLR (?), GOOG, HOKU (?), IBM, PBCT, RLRN, TPX

Friday, July 17, 2009
Before: AOS, ACO (?), BMI, BAC, BBT, C, FHN, GE, MI, MAT, PRSP, WBS
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 Again Virtually Unchanged

Market Again Virtually Unchanged

(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 volume was very light in Thursday's session. Nevertheless, from a technical standpoint the indices performed very well. Support and resistance levels held perfectly and trend moves formed in a highly orderly fashion, making the major 15 minute reversal points easy to see. The session began with a gap higher into price resistance from the zone of the previous day's highs. This resistance level held extremely well and a sharp selloff took place out of the opening bell with the gap zone quickly closing.

Dow Jones Industrial Average ($DJI)


The morning remained weak, but an underlying change in pace soon emerged. Even though the indices were punctuated with sharp downside moves until the 11:15 ET correction period, the moves were more short-lived. The S&Ps and Dow only barely breached previous 5 minute lows and the Nasdaq couldn't even accomplish that! This created a larger shift in momentum with a very gradual downtrend channel that manifested itself as a bull flag on the 15 minute time frame. The third low marked a pivotal trend exhaustion moment and it corresponded to both the 11:15 ET correction period and the 15 minute 20 sma. This set up a strong momentum reversal pattern into mid-day and the market quickly returned to the area of the day's highs.

S&P 500 ($SPX)


The market continued to push higher throughout the first half of the afternoon, but volume remained light and the overall action was very choppy. Trend exhaustion took place on the 5 minute time frame following a final push higher out of the 14:00 ET correction period into prior 15 minute highs. Throughout the afternoon the indices had crept higher on the 15 minute time frame, keeping pace with the 15 minute 20 sma. When this type of action forms, particularly on declining volume, it become very easy for the 15 minute 20 sma to give way with a more rapid downside move. This triggered soon after 14:30 ET and the market continued to display weakness into the closing bell with the Nasdaq leading the late-day selling.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) closed higher by 4.76 points, or 0.06%, to close at 8,183.17 on Thursday.A little over half the Dow's 30 index components posted gains on the day. They were led by the financials. JP Morgan (JPM) rose 2.78%, while Bank of America (BAC) rose 1.10%. Drug makers reversed course after strong gains the previous session. Merck (MRK) fell 3.67%. Pfizer (PFE) slipped 2.19%. Johnson & Johnson (JNJ) fell 0.68%. Alcoa (AA) also performed poorly on the day. The stock reported earnings after the close on Wednesday and gapped strongly higher into Thursday's opening bell, but that open also corresponded to strong price resistance at the 15 minute 200 sma and the stock held highs at the open and trended lower throughout the session.

The S&P 500 ($SPX) rose 3.12 points, or 0.35%, and closed at 882.68. Energy stocks did well after crude oil hit support in the zone of the 100 day sma. Crude oil futures fell under $60 a barrel intraday, but recovered prior to the close to end the day with small gains at $60.31 a barrel. The previous day's close was $60.14 a barrel.

The Nasdaq Composite ($COMPX) rose 5.38 points, or 0.31%, and it closed at 1,752.55 on Thursday. The Nasdaq was able to post gains thanks to Google (GOOG), which ended the session higher by 2%, and Research In Motion (RIMM), which gained 1.1%. Intel (INTC) also rose 0.5%. Microsoft (MSFT) and Apple (AAPL) did not mirror this type of performance, however, and both posted losses of approximately half a percent.

As we headed into Thursday's session, my bias was in favor of a more choppy trading environment with both the bulls and the bears having a difficult time sustaining moves from one session to the next. This proved to be the case throughout the light trading session and it remains my bis heading into Friday as well. I am looking for securities that congest into the 20 and 10 day simple moving averages overhead for short setups on the daily time frame. This will be resistance for the overall market as well. A larger weekly correction of last month's highs also continues to be highly probable at this point.

Bears Continue to Control Market

Bears Continue to Control 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! Trading on Wednesday began with a lot of choppy action. The index futures were up slightly in the premarket, leading to a minor gap higher into the opening bell. Premarket data on mortgage applications had little impact. The Mortgage Bankers Association reported an increase to a seasonly adjusted 10.9% last week after hitting its lowest level since last November just one week prior. The rate for the average 30-year mortgage is currently 5.34%. It had hit a record low of 4.61% in March and averaged 7.04% a year ago.

Dow Jones Industrial Average ($DJI)


The 5 minute 20 period simple moving average was hitting as resistance at the open on Wednesday and the 15 minute 20 sma was just overhead. Even though the indices were able to push through the 5 minute 20 sma following the 9:45 ET correction period, the market merely crept higher with a great deal of overlap going into the 15 minute 20 sma. This created a 15 minute bear flag that gave an early short trigger off the 15 minute resistance coming out o the 10:15 am ET correction period and then continued with a channel breakdown out of the 10:45 ET correction period.

The late morning selloff was very steady with all three indices easily breaking through Tuesday's closing lows. The pace continued well into the 11:15 ET correction period. At this point a minor correction from the selloff took place, but led to another breakdown into 12:30 ET. The pace on this second wave of selling was more gradual than the first, particularly in the Nasdaq. A slightly lower low in that index resulted in a type of double bottom in which a slightly lower low served as a bear trap and was followed by a stronger correction off the lows in the early afternoon.

S&P 500 ($SPX)


This early afternoon reversal was not much stronger than the previous decline and hence it was not strong enough to change the pace and allow for a larger reversal. It was strong enough, however, to take the indices higher for an hour into 13:30 and the 15 minute 20 sma once again. As in the morning, this was a strong resistance level and the 2 minute charts had established three waves of buying into that zone in the S&Ps, so they also hit with short-term trend exhaustion in the indices. This allowed the market to easily turned lower once again.

The pace of the selling escalated out of the 14:00 ET correction period and the S&P 500 and Dow Jones Ind. Ave. were soon retesting the morning lows. This price support hit at 14:30 ET with a very slightly lower low to repeat the Nasdaq's mid-day 2B reversal pattern, but on a larger scale. This rally also ran into resistance at the 15 minute 20 sma zone in the S&Ps and Dow, but the highs from 13:30 ET were stronger initially. Both zones broke cleanly in the final 30 minutes of trade with the market pushed rapidly through them off the 5 minute 20 sma support and rallied back into the zone of the morning highs and 5 minute 200 sma resistance. The indices closed just off this level at virtually breakeven for the day.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) closed higher by 14.81 points, or 0.18%, to close at 8,178.41 on Wednesday. About 2/3 of the Dow's 30 index components posted gains. It was led by the drug makers. Merck (MRK) posted a gain of 1.52%, followed by a 1.51% gain in Johnson & Johnson (JNJ), and a 1.41% gain in Procter & Gamble (PG). The top loser was General Electric (GE) with a loss of 2.72%, followed by a 2.55% loss in Bank of America (BAC), and a 1.91% loss in Intel. Financials and telecoms were among the weakest sectors. Alcoa (AA) kicked off earnings season following the closing bell. It was up slightly in regular trade and then popped higher afterhours with a loss that was less than anticipated.

The S&P 500 ($SPX) fell 1.47 points, or 0.17%, and closed at 879.56. Amgen (AMGN) was a top performer in both the S&P 500 and Nasdaq-100 following news that its experimental osteoporosis drug passed late-stage studies with the goal of preventing bone injuries in breast-cancer patients. Meanwhile, crude oil futures continued tumble after the Energy Department reported that domestic gasoline supplies climbed by more than twice the forecast level and inventories of distillate fuel rose to the highest level since 1985 with consumption dropping to 10-year lows. Oil inventories fell by 2.9 million barrels, which was less than the 3.2 million estimated. Crude oil ended the session at $60.14 a barrel (-4.4%). It has now fallen 14% so far this month with six straight days of downside after triggering an Avalanche™ short on July 1st. The CME Group (CME) and Intercontinental Exchange (ICE) were hit quite hard. The CME was down 6.4%, while ICE was down 13.1%. They operate the largest energy futures platforms.

The Nasdaq Composite ($COMPX) rose 1.00 point, or 0.06%, and it closed at 1,747.17 on Wednesday.

Although it will be difficult for the market to mount a strong reversal off the daily support at this point, the selling is going to have a more difficult time sustaining new moves as well. The 30-60 minute charts are rather extended on the downside and could use a break. I am still favoring more of a choppy trading environment as the week wears on with upside correction off support overlapping the trading range day by day, as opposed to manifesting itself with a stronger push higher. The larger weekly time frames remain bearish.

Market Continues to Lose Ground

Market Continues to Lose Ground

(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! Second-quarter earnings season officially kicks off today with Alcoa (AA) releasing its data after the closing bell. It ended the session on Tuesday on a positive note after CEO Klaus Kleinfeld's optimistic comments on Bloomberg TV, but the daily chart still shows room to push lower and the weekly time frame also appears to be favoring a larger correction off last month's highs. To learn how I play earnings releases, you can check out my Mastering Momentum Gaps course based upon a seminar I taught last fall. I have made the online version available for one week only at a special discount of $149 for unlimited 2-year access at http://www.tonihansen.com/gaptrading/order149.html. I'll be posting new videos throughout this earnings season to demonstrate the ongoing effectiveness of focusing upon market gaps for steady trading ideas.

Dow Jones Industrial Average ($DJI)


Aside from a few standouts like AA, the rest of the market was decidedly weak throughout the day and the indices trended steadily lower nearly the entire session. As we were heading into Tuesday morning we looked at a couple of scenarios. The first was the potential that the indices might be able to shift the pace of the action on an all-sessions time frame to allow for the formation of a reverse head-and-shoulders pattern and some upside to follow, but the undeniable path of least resistance remained in favor of further downside despite the daily support zone from last month's lows. This would create a third lows on the index futures since July 2nd.

Even though the market opened relatively unchanged on Tuesday morning, it very quickly turned in favor of the breakdown. Since the bounce on the 6th broke the upper trend channel made into into the 2nd low, however, this meant that a push to a third low would create a widening triangle on the all-sessions time frame and this greatly diminishes the three-wave selloff in terms of its potential to create a strong momentum reversal off the third low and can more easily throw the indices into a longer range with the high coming off the second low (from the 7th) serving as very strong initial resistance.

S&P 500 ($SPX)


The market didn't really give the bulls a chance at all throughout Tuesday's session. The market did attempt to bounce somewhat out of 11:00 am ET and Nasdaq formed a small momentum reversal off lows at that time, but the 5 minute 20 sma easily held since the base for the reversal was not large enough. The indices then tried again to correct off lows over noon with a 2B triggering just prior to 13:00 ET. This allowed the S&Ps and Dow to bounce quickly back into some previous highs on the 5 minute time frame, but the 15 minute 20 sma overhead easily held the market in. The pace was not able to adequately shift throughout the remainder of the day and the indices sold off into the closing bell.

Tuesday's action continued to confirm a larger weekly correction now under way and I will be using extreme caution when it comes to potential overnight holds on the upside over the next several months. It will simply be easier for a bear flag to form off support levels than the other way around at this point on the daily time frame.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) fell 161.27 points, or 1.94%, to close at 8,163.60 on Tuesday. This was the lowest close for the Dow in over 2 months. Alcoa (AA) was up 1.62% ahead of earnings, followed by a 0.64% gain in JP Morgan (JPM). Most of the market closed lower, however, and the losses in the Dow were led by DuPont (DD) (-5.09%), Caterpillar (CAT) (-4.45%), General Electric (GE) (-4.09%), and American Express (AXP) (-3.78%). The Dow is down 7.3% off its June 12th high when the index briefly turned positive for the year. Of course, this level also meant strong resistance.

The S&P 500 ($SPX) fell 17.69 points, or 1.97%, and closed at 881.03. The index has pulled back 6.9% off its high on June 12th and has now closed under its 200-day moving average. The 100 day sma will serve as support. Industrial and energy stocks were the strongest decliners for the day. Crude oil has continued to correct and was down another 1.8% to end the session at $62.93 a barrel on Tuesday. This was its 5th consecutive daily decline. Crude oil has fallen by approximately 10% so far this month after hitting highs of nearly $74.00 a barrel last month. There is still room for crude to continue to fall this week.

The Nasdaq Composite ($COMPX) fell 41.23 points, or 2.31%, and it closed at 1,746.17 on Tuesday. The Nasdaq is down 6.1% since June 12th. The Nasdaq was particularly weak thanks to the tech stocks. Google (GOOG) fell 3.2% to close under $400/share, while Apple (AAPL) dropped 2.3%. Out of the 75 stocks in the S&P Technology sector, 72 ended the day with a loss.

Oil Futures Plunge Through Last Monday's Lows Into 50-Day SMA

Oil Futures Plunge Through Last Monday's Lows Into 50-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! The market had a rough start to the new trading week on Monday. The session began with a large gap lower into the opening bell as a result of the trading range from Thursday and Friday in the index futures breaking down into Sunday evening when the index futures once gain began to trade. The index futures then began to diverge to a certain extent into Monday morning. The S&P 500 and Dow Jones Industrial Average was experiencing rounded lows on the all-sessions time frames, but the Nasdaq was trading in a longer range. This allowed the S&Ps and Dow to hold up a lot better on Monday morning than the Nasdaq.

Dow Jones Industrial Average ($DJI)


The market's gap lower took it into price support at the opening bell and the indices immediately pulled higher. The 5 minute 20 sma served as strong resistance at about the same zone as the gap closure. The Nasdaq held this level at the 9:45 ET morning correction period, but the S&Ps and Dow had a little bit more wiggle room and held on until 10:00 am ET.

The market fell apart when the Institute for Supply Management's index of nonmanufacturing businesses was released at 10:00 ET. The index rose from 44 in May to 47 in June. Readings under 50 indicate contraction. The S&P 500 futures were forming a 1-2 minute momentum reversal pattern at the 5 minute 20 period simple moving average resistance at the time of the release and this reversal pattern immediately triggered a short.

S&P 500 ($SPX)


The weaker Nasdaq was able to easily bust through the morning lows, but the S&P and Dow slowed as that price support level hit. The pace shifted and both indices triggered momentum reversal buy setups out of the 10:45 ET correction period. The Nasdaq lacked this momentum shift on the 2 minute time frame and the result was a much more gradual bounce off morning lows. It hit and held its 5 minute 20 sma around 11:30 ET while the other two indices were able to quickly breach the same resistance around 11:15 ET.

All three of the indices fell into a trading range over noon. This range was comprise of two pullbacks off highs on the 5 minute time frame, which is a typical corrective formation and is also a very bullish one. The light volume throughout the two-wave correction confirmed this bias and a buy signal was given when the channel from the second pullback into the 13:00 ET correction period broke higher. The follow-through was minimal at first, but once the upper end of the entire mid-day correction broke higher the pace of the buying increased dramatically. Within a matter of minutes the Dow was hitting new intraday highs and closing the morning gap while the S&Ps were also testing the zone of the morning highs. Even though the Nasdaq was lagging by quite a bit at this point, it hit strong resistance along with the rest of the market at 13:30 ET when it ran into the opening lows.

Nasdaq Composite ($COMPX)


The strength of the market out of 13:00 ET was very indicative of how the rest of the afternoon would play out. Such a shift off daily support such as the 50 day sma on the Nasdaq and previous lows on the Dow will most often result in continued upside into at least 15:30 ET when the market can pivot off a high at that point and correct into the close. When a 5 minute pivot off highs does not take place at 15:30 ET, however, then the indices will more often continue the trend and close at or just off afternoon highs. On Monday the market attempted to pivot off resistance out of the 15:00 ET correction period instead of pushing higher into 15:30 ET and this allowed the indices to resume the uptrend into the closing bell so that the indices followed through on the second scenario instead of the first.

It was the trading range from the end of last week, as well as the 5 minute 200 sma in the S&Ps and Dow, that ended the late day run approximately 15 minute prior to the close. The index futures then held that resistance with a base along those highs that continued into the early morning hours on Tuesday.

The Dow Jones Industrial Average ($DJI) rose 44.13 points, or 0.53%, to close at 8,324.87 on Monday. The range between the gainers and losers was quite wide with American Express (AXP) up 5.61% on an upgrade and Alcoa (AA) down 6.09% at the other end of the spectrum. Alcoa's losses came after reports circulated that the company would report a second quarter loss of 58 cents a share, although most analysts are expecting a loss of 34 cents a share. AA reports after the close on Wednesday and will mark the unofficial start of earnings season. Other top gainers included Merck (MRK), which was up 3.26%, DuPont (DD) was up 3.33%, and Procter Gamble (PG) was up 2.07%. Other top losers were Bank of America (BAC), which was down 3.88%, and Intel (INTC), which was down 1.08%.

The S&P 500 ($SPX) rose 2.30 points, or 0.26%, and closed at 898.72. Crude oil futures continued to fall sharply off last week's highs. It ended the session at $64.05 a barrel (-4%) on Monday, down from $66.36 on Thursday. It is down 8.36% so far this month and has hit a 6-week low, but it is still up 43.61% year-to-date. Other commodities also felt the pressure following remarks by Vice President Joe Biden that increased concerns over the true state of the economy. Gold and copper were among those that fell sharply during Monday's session. At the other end was Eastman Kodak (EK), which was the top gainer in the S&P 500 and closed higher by 6.3%.

The Nasdaq Composite ($COMPX) fell 9.12 points, or 0.51%, and it closed at 1,787.40 on Monday. Dell (DELL) was the top Nasdaq-100 performer. It rose 3.5%, but tech stocks were lower overall and the Nasdaq failed to perform as well as the S&Ps and Dow.

In Monday's column I wrote, "This should extend the 60 minute trend into Monday morning for that additional downside I am expecting, but the pace of the breakdown into this week is not as strong as last, so be on the lookout for a further change in the pace of the selling with rounded lows on the all-sessions time frame that will allow the market to again pull higher on the intraday charts." As we can see with both the S&Ps and Dow, this is exactly what took place.

Tuesday's bias is not quite as obvious. The move higher off the rounded lows left the market at some pretty strong resistance on a 30 minute time frame that can easily hold into Tuesday morning. This might lead to a reverse head-and-shoulders pattern on the all-sessions time frame, but the pace of the buying was not strong enough to rule out another low on that time frame despite the daily support.

The market definitely has an easier path for downside intraday into Tuesday, whereas pushing higher will require a better shift in momentum, as well as the need to deal with a lot of resistance converging on many time frames. A slightly lower low on the 30 minute would allow the market to bounce more easily later in the week, but I'm leaning more in favor of choppier corrections higher off support (choppy bounce/slower overall upside pace) with continued focus on a larger time frame correction off resistance (pull lower or into an extended sideways trend on the weekly time frame).

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, July 6, 2009
10:00 a.m. June ISM Non-Manufacturing Index: Expected: 46. Previous: 44.

Tuesday, July 7, 2009
7:45 a.m. ICSC Chain Store Sales Index For July 4: Previous: +1.6%.
8:55 a.m. Redbook Retail Sales Index For July 4: Previous: -4.4%.
4:30 p.m. July 3 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For July 4: Previous: -51.

Wednesday, July 8, 2009
7:00 a.m. July 1 Mortgage Refinance Applications: Previous: -30%.
10:30 a.m. July 2 U.S. Energy Dept Oil Inventories
3:00 p.m. May Consumer Credit: Expected: -$7.7B. Previous: -$15.7B.

Thursday, July 9, 2009
8:30 a.m. Initial Jobless Claims For July 4 Week: Expected: -4K. Previous: -16K.
10:00 a.m. May Wholesale Trade: Expected: -1%. Previous: -1.4%.
10:00 a.m. DJ-BTMU Business Barometer For June 26: Previous: +0.1%.
N/A June Chain-Store Sales

Friday, July 10, 2009
10:00 a.m. May Trade Balance: Expected: -$30.0B. Previous: -$29.16B.
10:00 a.m. June Import Prices: Expected: +1.9%. Previous: +1.3%.
10:00 a.m. Mid-July Reuters/U Mich Sentiment Index: Previous: 69.

Key Earnings Announcements This Week:

Monday, July 6, 2009
Before: CMED (?)
After: VIMC

Tuesday, July 7, 2009
Before: GBX, ISCA
After: RT

Wednesday, July 8, 2009
Before: FDO, PBG
After: AA, NUHC, WDFC

Thursday, July 9, 2009
Before: COMS, FCSX, HELE, PKX
After: INFY, LWSN, SGK (?), SGR, NCTY (?)

Friday, July 10, 2009
Before: CREL, PSMT, PGR (?)
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.

Disappointing Kickoff for the Third Quarter

Disappointing Kickoff for the Third Quarter

(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.)
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Good day! I know, the title for today's column seems a little strange given the fact that all three of the major U.S. indices posted gains on Wednesday. Let's take a closer look at the day's action, however, and you will soon see that despite the gains, the market's performance on Wednesday was anything but stellar. As we expected heading into this short, but data-packed trading week, the market has been on quite a roller coaster ride.

The economic data has whipped the market around one way and then the next since Monday morning and has been the driving force in morning action. The primary reason for such strong, short-term impacts is the fact that the indices are quite extended on the weekly and even monthly time frames and everyone is jumping over themselves trying to decide whether or not the market can push to another higher before correcting or if this is all there is for now and that larger weekly correction will hold last month's highs.

Dow Jones Industrial Average ($DJI)


In Tuesday's session the market turned around off lows with a shift in momentum to create a rounded low mid-day and into the afternoon. The right side of this bowl formation could have fallen into a longer trading range, but the market was propelled higher once again on the short-term time frames thanks to positive economic data on Wednesday morning.

The Institute for Supply Management manufacturing index rose from 42.8 in May to 44.8 in June. This is the strongest level since September. This was lower than expected and still under 50, indicating contraction, but the increase suggested that the worst could be over. The market did flush lower at 10:00 ET, but reversed again very quickly back to highs. In other news, the National Association of Realtors' Pending Home Sales Index rose 0.1% in May. This was the fourth month in a row, which was the first time the market had seen a 4-month increase since 2004.

S&P 500 ($SPX)


The market rallied into 10:30 ET, pushing sharply into the resistance from the previous day's highs. Since the momentum was so strong into this resistance zone, the indices actually managed a slightly higher high, but held the resistance zone and pulled back into the 5 minute 20 sma where they congested throughout mid-day. The momentum continued to weaken at this point with a series of steps lower on increasing momentum. After the market broke lower out of the mid-day range the 5 minute 20 sma served as resistance.

As I mentioned in the opening paragraph, the market closed higher on Wednesday, but the action was still not positive. This was due to the reversal off the intraday highs and the fact that momentum rose throughout the afternoon on the downside. The slightly higher highs in the morning created a trap and the market had already put in three waves of buying on a 30 minute time frame, so this served to round off highs on that same time frame, which means that it would be very easy for the indices to continue to display weakness into next week. The potential still remains for one more test of highs on the daily time frame, but this intraday action is going to make it more difficult on the S&Ps and Dow and makes the market even more at risk of a larger flush lower.

On Thursday the Bureau of Labor Statistics will be publishing the official estimates for Nonfarm Payrolls. May factory orders are also due to be released. The U.S. markets are closed on Friday in observance of the 4th of July holiday, so expect action to be particularly light on Thursday once we get past the morning's economic news.

Nasdaq Composite ($COMPX)


The Dow Jones Industrial Average ($DJI) rose 57.06 points, or 0.68%, to close at 8,504.06 on Wednesday.Kraft (KFT) ended the session well ahead of the rest of the Dow's 30 index components with a gain of 5.01%. This came after General Mills (GIS) raised its 2010 guidance, providing a boost for food stocks. Next in line was Intel (INTC) with a gain of 2.96%, followed by Coca-Cola (KO) with a gain of 2.48%. The main losers were the financials. Bank of America (BAC) fell 1.14%, followed by a 1.03% loss in American Express (AXP), and a 0.85% loss in JP Morgan (JPM).

The S&P 500 ($SPX) climbed 4.01 points, or 0.44%, and closed at 923.33. Crude oil futures fell 0.8% to $69.31 for the day after hitting $71.85 a barrel earlier in the session. The American Petroleum Institute reported that crude supplies fell 6.8 million barrels last week to 349.7 million barrels, while the Energy Information Administration reported a drop of 3.7 million barrels in crude supplies. This was greater than expected. Oil companies Exxon Mobil (XOM) and Chevron (CVX) were also up despite the crude decline. Although oil supplies were lower, gasoline supplies rose well over 2 million barrels. Retail gasoline prices averaged $2.63 a gallon with a year-to-date increase of 62.64%.

The Nasdaq Composite ($COMPX) added 10.68 points, or 0.58%, and it closed at 1,845.72 on Wednesday. Tech stocks were strong and the Philadelphia Semiconductor Index ($SOX) did particularly well and was up 1.5% with each of its 19 stocks closing higher.