Toni Hansen's Online Trading Blog

Dow Closes Under 10K

2010-02-08T17:14:00.001-08:00

Dow Closes Under 10K

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

Good day! The indices spent the majority of Monday's session flirting between positive and negative territory as they tried to hold onto last Friday's afternoon gains. In the end, the bulls lost that struggle and the Dow Jones Industrial Average closed under 10,000 for the first time since November.

Monday's session began relatively unchanged from Friday's close, which took place at price resistance, as shown on the 15 minute time frames for the three major indices. The market maintained this range throughout the first half of the trading day, but edged slightly higher within that range. This series of slightly higher highs was too premature on that 15 minute time frame to sustain a decent continuation move to break to the upside, so the morning's action merely created a "rounded high" intraday. This is a bearish formation, which eventually gave way to strong afternoon selling.

Dow Jones Industrial Average ($DJI)

The morning highs took place heading into the 11:15 ET correction period in the S&P 500 and Dow Jones Ind. Ave. Both indices were also testing 5 minute 200 sma resistance at this point. The Dow held its own moving average perfectly. The reversal was gradual to begin with. A failed attempt at a two-wave pullback off the highs on the 5 minute time frame for a buy setup into noon was followed by congestion along the 5 minute 20 sma in the indices. This support gave way at the 13:00 ET correction period. Volume had dropped off dramatically as the indices were congesting at the 5 minute 20 sma between 12:00-13:00. This indicated a lack of interest on the part of the bulls and made it easy for the support to break strongly lower when the next correction period hit.

An initial decent out of 13:00 ET found support at 14:00 ET. The markets returned once again to the 5 minute 20 sma. This time it served as resistance. The indices slid down that resistance, picking up momentum as the afternoon wore on. This momentum increased after 15:00 ET. A small bear flag on the 5 minute charts once again held the 5 minute 20 sma and the strongest descent of the day took place heading into the closing bell. All three of the major indices finished at the day's lows, which were just slightly lower than the lows made in the first 30 minutes of the day.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Monday at 9,908.39 with a loss of 103.84 points, or 1.04%. Home Depot (HD) was the Dow's best performer on Monday. It rose 2.18% following an upgrade from "equal weight" to "overweight" by Morgan Stanley. The financials, however, continued to weigh heavily on the index and Hewlett-Packard (HPQ) was the only other Dow component to post a gain (+0.57%). Bank of America (BAC) led the downside with a loss of 3.47%, followed by a 2.80% loss in American Express. Travelers (TRV) fell 2.45%, while Caterpillar (CAT) shed 1.87%.

The S&P 500 ($SPX) fell 9.45 points, or 9.45%, and closed at 1,056.74. Hasbro Inc. (HAS) was the S&P 500's biggest gainer. It rose 12.69% after beating fourth-quarter earnings expectations. It was followed by a 5.31% gain in CVS Caremark (CVS), which gapped sharply higher after it reported an increase in fourth-quarter profit thanks to same-store pharmacy sales. The home builders were also amongst the top leaders. Lennar Corp. (LEN) rose 4.62%, while KB Home (KBH) was up 3.55%. Pulte Homes (PHM) is due to report earnings ahead of the open on Tuesday. The financial sector fell 2.2%, but all 10 of its index sectors posted a loss. Some of the S&P 500's top losers for the day included Eastman Kodak (EK) (-3.95%), Newmont Mining (NEM) (-3.94%), Massey Energy (MEE) (-3.65%), and Wells Fargo (WFC) (-3.61%).

Nasdaq Composite ($COMPX)

The Nasdaq Composite ($COMPX) fell 15.07 points, or 0.70%, and it closed at 2,126.05 on Monday. The top gainers in the Nasdaq-100 were Nii Holdings (NIHD) (+4.36%), Priceline (PCLN) (+1.86%), Electronic Arts (ERTS) (+1.33%), Dentsply Intl. (XRAY) (+1.25%), and Dell (DELL) (+1.13%). The weakest were First Solar (FSLR) (-2.61%), News Corp. (NWSA) (-2.47%), and Adobe (ADBE) (-2.20%).

In other markets, crude oil futures rose 65 cents a barrel to settle at $71.84 a barrel, while gold rose $10.80 an ounce and settled at $1,063.

There are not a lot of major reports on the economic calendar this week, although earnings season is still in full swing. A couple of reports to watch will be the U.S. government's report on retail sales on Thursday and the consumer sentiment reading on Friday.

The market is currently favoring more downside into Tuesday morning, but the "V" low, followed by the rounded highs on Monday will allow Friday's lows to serve as strong intraday support on the 15 minute time frames. This type of back-and-forth action typically leads to a continued trading range, and that is what appears to be the most likely outcome for the beginning of the trading week.

Yesterday's comments continue to apply to the larger time frames: The best that the bulls can hope for will be a trading range on the weekly time frames in which the momentum shifts from its current stance of favoring sharper selling to one in which downside action is less severe. This would eventually allow the indices to once again break higher as the year wears on. Without that trading range, however, in which the indices bounce back to the zone of the year-to-date highs, the indices can easily form a weekly Avalanche™ with further selling this spring.

Dow Recovers After Dipping Under 10K

2010-02-07T21:07:00.001-08:00

Dow Recovers After Dipping Under 10K

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

Good day! The indices fell apart on Thursday following a strong intraday technical short setup with a 15 minute Avalanche in the S&P 500 and Dow Jones Ind. Ave. and a channel break in the Nasdaq, along with news of an unexpected increase in jobless claims. That weakness continued into Friday as well. The indices did manage to find some initial support at the 10:15 ET correction period. A light volume surge back to the morning highs took place within a mere 15 minutes, but that price resistance, along with the 15 minute 20 period simple moving averages, was enough to keep the bulls in check. The markets rolled over off those highs, first stalling at the 5 minute 20 sma support, and then returning to morning lows. A trading range followed with volume dropping once again into the early afternoon.

Dow Jones Industrial Average ($DJI)

The reverse-"V" formation at 10:30 ET highs, followed by a base along morning lows, created a two-wave continuation pattern favoring the bears coming out of 13:00 ET. The light volume throughout that base helped confirm this bias, because upside action off the support received less interest than the previous selling. In this case, that meant that the bears still retained control, while the bulls waited on the sidelines. The selling resumed shortly after the 13:00 ET correction period and continued strongly into the 14:00 ET correction period.

14:00 ET is a typical time period intraday for trend moves on 5 and 15 minute charts to come to an end. Reversals and trading ranges often begin at this time. The afternoon selloff had also lasted approximately as long as the selloff from 10:30 ET highs, creating another form of exhaustion. Because the afternoon descent was so steep, however, with the Dow hitting triple digit losses, the indices had a more difficult time maintaining a sharp reversal off the 14:00 ET lows. The 5 minute 20 sma held initially as resistance and the markets congested along this resistance zone into the 15:00 ET correction period.

S&P 500 ($SPX)

When the indices rallied into the 5 minute 20 sma from 14:00 into 14:30 ET, they could have easily reacted to that resistance level by pulling lower to lead to another two-wave continuation move on the downside. By hugging the 5 minute 20 sma instead, they managed to shift the momentum of the price action on that time frame. When the 5 minute 20 sma broke higher, it triggered a buy setup on that time frame. The change in momentum helped the indices reverse quickly. By 15:15 ET the indices were once again testing the zone of the morning highs. They held this level into the closing bell and ended the session with token gains.

Nasdaq Composite ($COMPX)

Information technology and materials were the two strongest sectors on Friday. Both finished the session higher by 1%. They had been among the worst-performers recently. The worst groups on Friday, however, were health care, utilities, and financials services. All three fell by approximately 2%.

The Dow Jones Industrial Average ($DJI) ended the session on Friday at 10,012.23 with a gain of 10.05 points, or 0.10%. The index overall was down 0.55% for the week and 3.99% YTD. On Friday, Intel (INTC) was the best-performer in the Dow, rising 2.37%. It was followed by a gain of 2.33% in Cisco (CSCO). Alcoa (AA) rose 2.09%. The top decliners were General Electric (GE) with a loss of 1.56%, Boeing (BA) with a loss of 1.55%, and McDonalds (MCD) with a loss of 1.08%.

The S&P 500 ($SPX) rose 3.08 points, or 0.29%, and closed at 1,066.19. The index ended the week lower by 0.72% and is down 4.39% YTD. Airgas Inc. (ARG) led the S&P 500's gainers after it spiked higher by 40.04% on Friday following an acquisition offer by competitor Air Products & Chemicals at a 38% premium over Thursday's close. After falling sharply on Thursday, MEMC Electr. Materials (WFR) was the second-best performer with a gain of 7.67%. Other top gainers were Newmont Mining (NEM) (+6.18%) and Broadcom (BRCM) (+6.06%). Losers outpaced the winners by 283 to 147, with little change in the remaining index components, despite the slight gains in the overall index. Air Products and Chemicals (APD) was the day's biggest loser in the S&P 500 (-6.85%).

The Nasdaq Composite ($COMPX) rose 15.69 points, or 0.74%, and it closed at 2,141.12 on Friday. The Nasdaq was down 0.29% for the week and is down 5.64% YTD. BRCM was the Nasdaq-100's biggest gainer on Friday. It was followed by Applied Materials (AMAT) (+3.64%) and LAM Research (LRCX) (+3.22%). It's biggest losers were Foster Wheeler (FWLT) (-6.04%) and Illumina (ILMN) (-3.11%).

In other markets, crude oil futures fell under $70 a barrel before ended the week at $71.19 a barrel, while gold hit a 3-month low and settled at $1,052.80. The dollar also resumed its climb and hit its highest level against the euro since last May.

The markets have room to push higher again into Monday morning, but the zone from Thursday's highs will serve as strong price resistance. Given the pace of the selling on Thursday, it will still be difficult to maintain a strong upside move on the 30 minutes time frame. My best guess is that the best the bulls can hope for right now is a trading range on the weekly time frame that would allow the pace of the daily momentum to shift and create a buy setup on the weekly charts. This can take several months to develop.

Economic Reports and Earnings Events This Week

2010-02-07T21:06:00.001-08:00

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Economic Reports and Events This Week

Domestic:
Eastern Time Zone (GMT -5:00) (New York, Toronto)

Feb 9 10:00 AM Wholesale Inventories Dec

Feb 10 8:30 AM Trade Balance Dec
Feb 10 10:30 AM Crude Inventories
Feb 10 2:00 PM Treasury Budget Jan

Feb 11 8:30 AM Continuing Claims 02/06
Feb 11 8:30 AM Initial Claims 02/06
Feb 11 8:30 AM Retail Sales Jan
Feb 11 8:30 AM Retail Sales ex-auto Jan
Feb 11 10:00 AM Business Inventories Dec

Feb 12 9:55 AM Mich Sentiment Feb

Domestic and Foreign:
Eastern Time Zone (GMT -5:00) (New York, Toronto)
Feb 07 06:01 NZD QV House Prices JAN
Feb 07 18:50 JPY Trade Balance - BOP Basis
Feb 07 18:50 JPY Current Account Total DEC
Feb 07 EUR German Retail Sales DEC
Feb 07 JPY Eco Watchers Survey: Outlook and Current JAN

Feb 08 01:45 CHF Unemployment Rate JAN
Feb 08 03:15 CHF Retail Sales DEC
Feb 08 04:30 EUR Euro-Zone Sentix Investor Confidence FEB
Feb 08 08:15 CAD Housing Starts JAN
Feb 08 19:01 GBP RICS House Price Balance JAN
Feb 08 19:01 GBP U.K. BRC Retail Sales Monitor JAN
Feb 08 19:30 GBP NAB Business Conditions JAN

Feb 09 02:00 EUR German Trade Balance DEC
Feb 09 02:00 EUR German Consumer Price Index JAN ***
Feb 09 02:00 EUR German Consumer Price Index - EU Harmonised
Feb 09 04:30 GBP Visible Trade Balance DEC
Feb 09 18:30 AUD Westpac Consumer Confidence and Confidence Index FEB
Feb 09 GBP NIESR Gross Domestic Product Estimate JAN ***

Feb 10 04:30 GBP Industrial Production DEC
Feb 10 05:30 GBP Bank of England Quarterly Inflation Report ***
Feb 10 08:30 CAD International Merchandise Trade DEC
Feb 10 08:30 USD Trade Balance
Feb 10 14:00 USD Monthly Budget Statement
Feb 10 16:30 NZD Business NZ Performance of Manufacturing Index JAN
Feb 10 19:30 AUD Employment Change JAN ***
Feb 10 19:30 AUD Full Time Employment Change JAN

Feb 11 03:15 CHF Consumer Price Index JAN
Feb 11 04:00 EUR European Central Bank Publishes Monthly Report ***
Feb 11 08:30 USD Advance Retail Sales JAN ***
Feb 11 08:30 USD Retail Sales Less Autos JAN ***
Feb 11 16:00 NZD REINZ House Sales JAN
Feb 11 16:45 NZD Retail Sales DEC
Feb 11 16:45 NZD Retail Sales Ex-Auto DEC
Feb 11 16:45 NZD Retail Sales Ex-Inflation DEC

Feb 12 00:00 JPY Consumer Confidence JAN
Feb 12 02:00 EUR German Gross Domestic Product Q4
Feb 12 02:45 EUR French Gross Domestic Product Q4 ***
Feb 12 05:00 EUR Euro-Zone Industrial Production DEC
Feb 12 05:00 EUR Euro-Zone Gross Domestic Product Q4 ***
Feb 12 09:55 USD University of Michigan Consumer Confidence FEB Prel. ***

*** Highly influential

Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed "medium to high impact".

Key Earnings Announcements This Week:

Monday, February 8, 2010
Before: AMRI (?), AGNC, BWP, CGA, CHDX, CNA, CPIX (?), CVS, GWR, HAS, HS, LFUS, L, LO, MCY, OMC (?), SIRO, VTNC, VOD
During: -
After: ADCT, ANDE, ATML, AXS, BWY, CPT, CIM (?), CMP, CPX (?), CCRT (?), CUTR, DGI (?), ERTS, ESLR, FWRD, HAR, HIG, HIMX, IPHS (?), LNCR, LNC, NUAN, OTTR, OMI, PKY, PIKE, PPS, PPDI, PFG, PSEC (?), QGEN (?), RENT, SKH, SWI, SRX, TMRK, TWTC, VECO, VMC, WRB, WCN, ZOLT

Tuesday, February 9, 2010
Before: ACM, AGCO, AGU, AHCI, ALLT, ANR, ATRO, BIIB, BJS, CAM, FUN (?), CE, CNC, CHD, KO, CTSH, CVH, CYNO, ENER, IT, GET, IACI, IFF, KVHI, LCAV, MLM, TAP, NURO (?), NOOF (?), NYX, PCH, PHM, RTIX, RBCN, TIN, GTS, VSH, WMG, ZBRA
During: -
After: ATAC, AGAM (?), AFG, AHL, BIDU, BOBE (?), CFN, CERN, CRK (?), EXBD, CXW, DIOD, DSCM, EM (?), EOG, GIL, HCSG (?), HNI, KFRC, LTRE, LGF, MAXY (?), NTGR, OPEN, PEET (?), QLTY (?), RNR, RUE (?), SB, TCO, UDR, ULTI, USNA, VCLK (?), DIS, WTS (?), WWWW, XL

Wednesday, February 10, 2010
Before: ABD, MT, CAE, CCE, CSC, DF, DISCA, ELN, FORR, ICE, JNY, ID, LNCE, LVLT, LPX, MMC, MXGL, MTOX, NURO, NYT, NWPX (?), OMC, PFCB (?), SNI, SIAL, SON, S, TLM, TGH, TDG, WXS, WYN
During: -
After: ATVI, ALL, AMKR, ATR, ARRS, BMR, BSX, CBM, STV, SCOR, SPA, CLB, CPII, CRAY, DVA, PROJ, XRAY, EGP, ELON, EDMC, WIRE (?), EQIX, RE, GLUU, GSIC, HGR, HIW, NSIT, KONA, LPSN, LFT, LOOP, MAS, MDSO (?), NSR, OSUR, PRE, PVA, PAA, PL, PRU, O, SWIR, TLEO, TMK, WATG

Thursday, February 11, 2010
Before: ASF, AKNS, ALU, ARE, ALXN, ARIA (?), AN, BWA, CATM, CAAS (?), CBB, ECL, EMS, ECA, NPO, EXPE, FLIR, GLT, GPI, HEP, HOS, RX (?), IPCC, IRC, JASO, JRN, KBW (?), LH, LF, LUFK, MAC, CLI, MAR, MNTA, NOVA, NRG (?), OZM, OHI (?), PMTI, PTI (?), PTEN, PEP. PGN, PLD, QCCO (?), QUIX (?), REV (?), SCG, SKYW, SNN (?), SF (?), STRA, ELOS, SYNT, TKLC, TDC, TOT (?), TRAD, THS, VFC, VIA.B, WWE
During: GRC (?), PM
After: ACL, AB, AWH, BEC, BJRI, BEC, BJRI, NILE, BELD, CEC (?), CEPH, CAKE, CPC (?), CMG, CHH, CGNX, CSTR, CML, DCT, EHTH, ENOC, EPIC, FARO (?), FFG, GDI, BGC, HNSN (?), HE, XXIA (?), LVS (?), MFE, MOH, NRP, PNRA, PTC, PNSN, PRAA, PRO, QDEL, RNWK, RSG, ROVI, SQNM (?), SONO, STMP, SHO (?), SMMX, SVR, KNOT (?), USTR, VARI (?), XNPT (?), ZGEN

Friday, February 12, 2010
Before: A, ALE, HCP, IR, MFA (?), PAS, UPL
During: DUK
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.

Week-to-Date Gains Completely Eliminated

2010-02-04T14:19:00.001-08:00

Week-to-Date Gains Completely Eliminated

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

Good day! Well... unless you are a bull! Stocks took a bearing on Thursday after several days of light, but steady gains as the indices corrected off last Friday's support. As I mentioned in yesterday's column, the Nasdaq had been trading steadily higher for three days, during which time it held the 15 minute, 20 period simple moving average. It is EXTREMELY rare for any of the major indices to manage this feat past Day 3, so the index was due for a price correction. Meanwhile, the S&P 500 and Dow Jones Ind. Ave. had fallen sharply off Wednesday morning highs and then formed a base into the closing bell with two-waves of upside in it. This created the start of an Avalanche™ pattern, which is the term I use for a specific pattern that serves as the first continuation setup to kick off a new downtrend.

Dow Jones Industrial Average ($DJI)

The index futures already began to follow through on this bearish bias in the early morning hours on Thursday with continued concerns over Europe's economy, particularly Greece, which continued to make headlines. When the latest jobs data came out, however, the bottom completely gave way. The light volume that had accompanied the week-to-date rally meant that the bulls were already nervous and there was not a lot of upside participation. Those that had been on edge heading into Thursday morning threw up their hands by the time the opening bell rang.

Initial claims for jobless benefits increased by 8,000 to 480,000 last week. This took economists by surprise. They had been expecting it to fall to 454,000. The four-week moving average also increased. The reaction was immediate and the indices resumed their decline, but at a faster pace. Commodity prices were particular affected, while the U.S. Dollar rallied on the news. By the end of the session, both the materials and financials sectors in the S&P 500 had fallen by more than 3.7%. Keep an eye out on Friday for the the government's nonfarm payroll report for January.

S&P 500 ($SPX)

The sharpest intraday selling on Thursday took place in the first 30 minutes of trade following the opening bell. By the time the indices found initial support, they had already wiped out the week's gains. The selling did not end, but the pace of the selloff did shift. A series of two-wave continuation patterns, or bear flags, continued to trigger sell setups into the final hour of trade and all three of the major indices ended the session at lows. Only the Nasdaq managed to keep from breaking to new lows on the week, but even it closed at that previous level of support.

Nasdaq Composite ($COMPX)

The Dow Jones Industrial Average ($DJI) ended the session on Thursday at 10,002.18 with a loss of 268.37 points, or 2.61%. Only Cisco (CSCO), which had gapped higher on a positive earnings report, managed to post a gain in the Dow. It gave up a hefty portion of the early-morning gains, however, and only ended the session higher by o.39%. Financials were the biggest losers. Bank of America (BAC) fell 5.02%, while J.P. Morgan (JPM) followed with a loss of 4.82%. Other top losers were Alcoa (AA) (-4.3%), and Merck (MRK) (-4.18%).

The S&P 500 ($SPX) fell 34.17 points, or 3.11%, and closed at 1,063.11. Less than a dozen of the S&P 500's index components posted a gain. The top performers were retailers, including Abercrombie & Fitch (ANF) (+3.91%), Macys (M) (+2.65%, Gap (GPS) (+2.42%), and Big Lots (BIG) (+1.54%). Top losers were MEMC Electr. Materials (WFR) (-14.89%), Monster Worldwide (MWW) (-12.36%), and Eastman Kodak (EK) (-11.42%).

The Nasdaq Composite ($COMPX) fell 65.48 points, or 2.99%, and it closed at 2,125.42 on Thursday. Only CSCO, Teva Pharmaceutical (TEVA) (+0.22%) and Costco (COST) (+0.17%) posted gains in the Nasdaq-100. The biggest losers were Steel Dynamics (STLD) (-7.10%) and Joy Global (JOYG) (-6.95%).

The market's can still slip lower ahead of the weekend, but we are not likely to see the same momentum repeated. The economic data due out in the morning, namely the employment data, will play a central role, so I suggest waiting for data to be released and focus upon trading the reaction instead of speculating on it ahead of time. The market has room at this point on both the upside and downside intraday without a strong bias, so the news will likely be the determining factor.

Nasdaq Creeps Higher While S&P and Dow Stall

2010-02-03T23:32:00.000-08:00

Nasdaq Creeps Higher While S&P and Dow Stall

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

Good day! Volume continued to drop in the indices as they correct off the recent daily support that held on Friday into the closing bell. Since then, the market has been pulling slightly higher, but without a great deal of conviction. The Nasdaq has been slower overall, but while the S&P 500 and Dow Jones Industrial Average held 60-minute resistance into Tuesday's close, the Nasdaq continued to creep higher. The S&P and Dow had both hit equal move resistance on the larger intraday time frames with Tuesday's rally compared to the one into Monday morning, but the Nasdaq had been reacting more gradually to the support on the daily time frame and did not have a comparable resistance level to deal with.

Dow Jones Industrial Average ($DJI)

All three of the major indices began Wednesday's session with a gap lower into the opening bell. This gap quickly filled, however, within the first 15 minutes of the day. The gap closure level served as resistance and the pace of the buying slowed. The indices rounded off at these highs and then turned lower once again into the 10:15 ET correction period. The S&Ps and Dow both hit slightly lower lows on this reversal, but the Nasdaq was able to hold lower channel support on the 15 minute chart, along with the opening lows. When it bounced into 11:15 ET, it managed to establish a slightly higher high, while the S&Ps and Dow were merely forming two-wave corrections off the lows into 5 minute 20 sma resistance. This two-wave corrective action is typical for a continuation pattern in the direction of the previous trend and the lighter volume on the bounce helped the two indices turn strongly lower into noon.

Noon is a typical reversal period for the market intraday. Major intraday highs or lows are often made within 5 minutes of this time. In this case, another slightly lower low had formed in the S&Ps and Dow, while the Nasdaq was again at lower channel support, but in the upper half of the day's range (shown on the 15 min. charts). The volume was lighter on this selloff than the earlier morning action, allowing the support and the correction period to hold. The slightly lower lows in the S&Ps and Dow formed at a slower pace than the 10:15 ET decline, so the second low served as a bear trap, allowing the market to bounce back quickly into the early afternoon.

S&P 500 ($SPX)

The Nasdaq broke to new highs on the session as the market came out of the 13:00 ET correction period. This push higher took the S&Ps and Dow higher as well. The Dow pushed for a retest of the morning highs, but the S&Ps fell a little short of them and ended up hugging the 15 minute 20 sma resistance throughout the remainder of the session, while the Dow and Nasdaq congested in the upper 50% of the day's range until the closing bell. Despite this trading range, the range itself was not very choppy on the 2-5 minute charts and there were nice swings on the smaller time frames that were favorable for scalpers.

Nasdaq Composite ($COMPX)

The Dow Jones Industrial Average ($DJI) ended the session on Wednesday at 10,270.55 with a loss of 26.30 points, or 0.26%. Although the Dow's gainers amounted to less than a third of the Dow's index components, its losses were minor. The top performers were Disney (DIS) (+2.57%), McDonalds (MCD) (+1.84%), Wal-Mart (WMT) (+1.46%), and 3M (MMM) (+1.33%). Pfizer (PFE) was the worst-performer in the Dow, falling 2.31% after it missed earnings estimates. Merck (MRK) followed with a loss of 2.07%.

The S&P 500 ($SPX) fell 6.04 points, or 0.55%, and closed at 1,097.28. Lexmark Intl. (LXK) was again a leader in the S&P 500. It closed higher by 7.50%. News Corp. (NWSA) followed with a gain of 7.13%. CBS Corp. (CBS) rose 4.56%. Western Union (WU) fell 8.91%, Polo Ralph Lauren (RL) fell 8.36%. Ryder Sys. (R) fell 7.74%. These were the top losers in the S&P 500.

The Nasdaq Composite ($COMPX) rose 0.85 point, or 0.04%, and it closed at 2,190.91 on Wednesday. NWSA was also the best-performer in the Nasdaq-100. It was followed by a 5.54% gain in Baidu (BIDU), a 3.40% gain in Research in Motion (RIMM), and a 3.39% gain in IAC Interactive Corp. (IACI). The Nasdaq-100's biggest losers were CH Robinson Worldwide (CHRW) (-6.76%), followed at a distant second by Millicom Intl. Cellular (MICC) (-2.81%). Cisco (CSCO) reported earnings of 40 cents a share after the close, beating estimates with net sales up 8% year-over-year, creating strong afterhours activity that should result in a good upside gap into Thursday morning.

In other markets, crude oil futures fell 25 cents to settle at $76.98 a barrel followed the Energy Information Administration's report that crude-oil inventories rose 2.3 million barrels last week. This was less than the 4.7 million increase reported by the American Petroleum Institute on Tuesday. The EIA meanwhile reported that gasoline inventories fell by 1.3 million barrels.

Earlier in the day on Wednesday, the Institute for Supply Management also reported that there was only a small gain in its non-manufacturing index with a reading of 50.5%, while the employment sub-index remained weak at 44.6%. Under 50% is contraction. The rate of those who are unemployed or underemployed in the U.S. is currently over 17%.

The indices are likely to fall back once again on Thursday. The Nasdaq has been on a three-day push higher and it is extremely unusual for an index to push higher for three days and still be able to maintain a trend that is above or hugging the 15 minute 20 period simple moving average. The S&Ps and Fow are also forming potential 15 minute Avalanches™ with two waves of upside in the afternoon following the stronger morning decline. This is also bearish for the short-term.

Market Continues to Edge Higher Off Daily Support Levels

2010-02-02T21:32:00.000-08:00

Market Continues to Edge Higher Off Daily Support Levels

(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 continued to push higher on Tuesday after reacting to daily support off Friday's lows. The indices had sold off sharply in the third week of January, but that selling pace abated last week after the indices struck support at the 100 day simple moving averages in the major indices. This momentum shift helped the indices pull higher this week, although volume has been light and the upside pace off the lows has been fairly comparable to the final stages of the selloff last week. As expected, the S&Ps and Dow Jones Industrial Average had the strongest reaction to the support since the momentum shift last week was more pronounced in those two indices than in the Nasdaq, which had been weighed down by technology shares.

Dow Jones Industrial Average ($DJI)

The market opened slightly higher on Monday morning, but failed to push past the 15 minute highs to begin with. The indices pulled back to close the minor gap over the course of the next 15 minutes. The S&Ps and Dow experienced gradual corrections into their 5 minute 20 period sma support, while the Nasdaq continued to display greater weakness.

Things turned around rather quickly once the 10:00 ET pending home sales data was released by the National Association of Realtors. According to their index of pending home sales, sales were up 1% in December. They had fallen 16.4% the month before. This outcome was better-than-expected and the homebuilder D.R. Horton (DHI) also helped promote a positive mood after it reported a quarterly profit for the first time in nearly three years.

The market moved strongly higher on the 5 minute time frame out of the pending home sales data until the S&Ps and Dow both hit strong 15 minute resistance at prior 15 minute highs from Friday. This resistance level hit at approximately 10:30 ET and the market correction with a trading range into noon. The data-driven move was the strongest of the day, but the indices still managed to spend the remainder of the session in an uptrend. The 5 and 15 minute 20 sma served as support throughout that uptrend. A series of 2-wave bull flags led to minor buy setups throughout the day that corresponded well with the intraday correction periods. The final one took place out of the 15:00 ET correction period before the indices pulled back slightly in the final 30 minutes of trade to close just off the day's highs.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Tuesday at 10,296.85 with a gain of 111.32 points, or 1.09%. All of the Dow's 30 index components posted a gain on Tuesday except for two, which were once again only minuscule losses of under 0.1%. These exceptions were DuPont (DD) and 3M (MMM). Two-thirds posted gains of over 1%. The leaders were General Electric (GE) (+3.69%), Merck (MRK) (+3.24%), Pfizer (PFE) (+2.39%), J.P. Morgan (JPM) (+2.32%), and Alcoa (AA) (+2.32%).

The S&P 500 ($SPX) rose 14.13 points, or 1.30%, and closed at 1,103.32. Eastman Kodak (EK) (+12.83%) was the biggest gainer in the S&P 500. It was closely followed by an 11.98% gain in Lexmark Intl. (LXK), a 10.92% gain in D R Horton (DHI), and a 10.10% gain in Emerson Elec. (EMR).

Nasdaq Composite ($COMPX)

The Nasdaq Composite ($COMPX) rose 18.86 points, or 0.87%, and it closed at 2,190.06 on Tuesday. Hologic Inc. (HOLX) was the best-performer in the Nasdaq-100, rising 8.72%, while Flextronics (FLEX) and Seagate Tech. (STX) both followed with a gain of 3.80% each. Qualcomm Inc. (QCOM) (-1.28%) and Wynn Resorts (WYNN) (-1.07%) were the two biggest losers in the Nasdaq-100.

In other markets, crude oil futures continued to react to the daily support that also hit last week and closed higher by $1.27 a barrel at $77.19. Gold was also on the rise and closed higher by $10.50 at $1,115 an ounce.

My outlook has not changed a great deal since yesterday. The market is likely to continue to hold this daily support zone into Wednesday. There is also still the higher risk of decent day-to-day overlap throughout the week, particularly in the weaker Nasdaq. The 15 and 30 minute charts are showing resistance into Tuesday's close, so there is a good chance for a pullback into Wednesday as the indices correct to a greater degree off that resistance.

Market Recoups Some of Last Week's Heavy Losses

2010-02-02T00:06:00.001-08:00

Market Recoups Some of Last Week's Heavy Losses

(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 to bounce back in a sloppy day of trade on Monday to recoup some of January's heavy losses with the kick off of the new month. The recovery was on lighter volume than the recent decline and appeared to take place independent of the day's economic data. This data included the Institute for Supply Management's manufacturing index which rose from a revised reading of 54.9 in December to 58.4 in January. Construction spending fell 1.2% in December, which was worst-than-expected. November's reading was also revised lower. A separate report showed that personal spending rose 0.2% in December, which was slightly less-than-expected. Personal spending overall for 2009 fell 0.4%.

Dow Jones Industrial Average ($DJI)

In other news on Monday, the White House revealed its 2010 budget. The deficit is expected to increase to $1.56 trillion this year, which is the highest it has been since World War II, but it is anticipated to then decline throughout the remainder of Obama's term.

Monday's session began with a gap higher into the opening bell. It was the least-pronounced in the technology-laden Nasdaq. The Dow had the strongest real relative strength. It opened just under its 5 minute 200 period simple moving average, which served as some initial resistance. Nevertheless, the entire market headed higher in the first hour of trade. Nearly all of the day's gains were made by that point. The indices spent the remainder of the session in a range along these highs. A two-wave correction formed into noon, but the buy trigger came off the lower end of the day's range so it did not follow through with a new high. Instead, the market held resistance at the earlier morning highs. The session ended just a few ticks off these highs.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Monday at 10,185.53 with a gain of 118.20 points, or 1.17%. Only two of the Dow's 30 index components posted a loss and the losses were very small. These included a 0.10% loss in Disney (DIS) and a 0.06% loss in 3M (MMM). The top gainers were Alcoa (AA) (+4.95%), DuPont (DD) (+3.22%), Exxon Mobile (XOM) (+2.72%), and McDonalds (MCD) (+2.34%). The industrials were strong following the stronger-than-expected ISM manufacturing report. A number of other countries also posted strong manufacturing data. Meanwhile XOM reported a 23% decline in profit, but it's fourth quarter earnings of $1.27 a share beat expectations and helped boost its share price.

The S&P 500 ($SPX) rose 15.32 points, or 1.43%, and closed at 1,089.19. The top gainers in the S&P 500 were Massey Energy (MEE) (+7.94%), Nvidia (NVDA) (+7.67%), and Allegheny Technologies (ATI) (+7.42%). One of the top losers was Amazon.com (AMZN) (-5.21%) after it announced that it would be raising its e-book prices following pressure by the Macmillan publishing house.

A strong gain of $1.54 a barrel in crude oil helped lift energy shares. Crude oil futures for March delivery rose to $74.43 a barrel.

The Nasdaq Composite ($COMPX) rose 23.85 points, or 1.11%, and it closed at 2,171.20 on Monday. NVDA was the Nasdaq-100's best-performer, followed by a 7.12% gain in Seagate Tech. (STX). Warner Chilcott (WCRX) was the Nasdaq-100's worst-performer (-6.84%), followed by AMZN.

Nasdaq Composite ($COMPX)

The market will likely continue to hold onto the daily support this week with the increased risk that we will also continue to see greater overlap in price action from one day to the next as the bulls and the bears wrestle it out. The momentum has been shifting over the past week and that momentum shift can easily pull the indices higher to correct more from the recent selling with a price correction, but the Nasdaq will have a more difficult time since the pace of the selling in that index has remained stronger-than-average. Typically this will result in a more gradual correction off support levels.

Market Recoups Some of Last Week's Heavy Losses

(Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)
http://www.tradingfrommainstreet.com/images/facebook2.gif

Good day! The market managed to bounce back in a sloppy day of trade on Monday to recoup some of January's heavy losses with the kick off of the new month. The recovery was on lighter volume than the recent decline and appeared to take place independent of the day's economic data. This data included the Institute for Supply Management's manufacturing index which rose from a revised reading of 54.9 in December to 58.4 in January. Construction spending fell 1.2% in December, which was worst-than-expected. November's reading was also revised lower. A separate report showed that personal spending rose 0.2% in December, which was slightly less-than-expected. Personal spending overall for 2009 fell 0.4%.

Dow Jones Industrial Average ($DJI)
http://www.tradingfrommainstreet.com/images/FocusLetter/20100202dow.gif

In other news on Monday, the White House revealed its 2010 budget. The deficit is expected to increase to $1.56 trillion this year, which is the highest it has been since World War II, but it is anticipated to then decline throughout the remainder of Obama's term.

http://www.tradingfrommainstreet.com/images/banners/MBT468x60b.jpg

Monday's session began with a gap higher into the opening bell. It was the least-pronounced in the technology-laden Nasdaq. The Dow had the strongest real relative strength. It opened just under its 5 minute 200 period simple moving average, which served as some initial resistance. Nevertheless, the entire market headed higher in the first hour of trade. Nearly all of the day's gains were made by that point. The indices spent the remainder of the session in a range along these highs. A two-wave correction formed into noon, but the buy trigger came off the lower end of the day's range so it did not follow through with a new high. Instead, the market held resistance at the earlier morning highs. The session ended just a few ticks off these highs.

S&P 500 ($SPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20100202sp.gif

The Dow Jones Industrial Average ($DJI) ended the session on Monday at 10,185.53 with a gain of 118.20 points, or 1.17%. Only two of the Dow's 30 index components posted a loss and the losses were very small. These included a 0.10% loss in Disney (DIS) and a 0.06% loss in 3M (MMM). The top gainers were Alcoa (AA) (+4.95%), DuPont (DD) (+3.22%), Exxon Mobile (XOM) (+2.72%), and McDonalds (MCD) (+2.34%). The industrials were strong following the stronger-than-expected ISM manufacturing report. A number of other countries also posted strong manufacturing data. Meanwhile XOM reported a 23% decline in profit, but it's fourth quarter earnings of $1.27 a share beat expectations and helped boost its share price.

The S&P 500 ($SPX) rose 15.32 points, or 1.43%, and closed at 1,089.19. The top gainers in the S&P 500 were Massey Energy (MEE) (+7.94%), Nvidia (NVDA) (+7.67%), and Allegheny Technologies (ATI) (+7.42%). One of the top losers was Amazon.com (AMZN) (-5.21%) after it announced that it would be raising its e-book prices following pressure by the Macmillan publishing house.

A strong gain of $1.54 a barrel in crude oil helped lift energy shares. Crude oil futures for March delivery rose to $74.43 a barrel.

The Nasdaq Composite ($COMPX) rose 23.85 points, or 1.11%, and it closed at 2,171.20 on Monday. NVDA was the Nasdaq-100's best-performer, followed by a 7.12% gain in Seagate Tech. (STX). Warner Chilcott (WCRX) was the Nasdaq-100's worst-performer (-6.84%), followed by AMZN.

Nasdaq Composite ($COMPX)
http://www.tradingfrommainstreet.com/images/FocusLetter/20100202nas.gif

The market will likely continue to hold onto the daily support this week with the increased risk that we will also continue to see greater overlap in price action from one day to the next as the bulls and the bears wrestle it out. The momentum has been shifting over the past week and that momentum shift can easily pull the indices higher to correct more from the recent selling with a price correction, but the Nasdaq will have a more difficult time since the pace of the selling in that index has remained stronger-than-average. Typically this will result in a more gradual correction off support levels.

Market Continue to Tumble

2010-02-01T00:40:00.001-08:00

Market Continue to Tumble

(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 continued to push lower into the weekend on Friday with selling particularly heavy once again in the tech stocks. Apple (AAPL) and Microsoft (MSFT) both felt considerable strain and held down the Nasdaq. AAPL has been struck with the "sell the news" bug after its new iPad announcement and, while good, MSFT's earnings were apparently not good enough to excite investors. Materials and energy shares also felt the pressure. Crude oil closed lower at $72.89 a barrel and is down 8.2% ytd.

The market's selloff resumed despite several pieces of decent economic data. The gross domestic product grew 5.7% last quarter, January's Chicago PMI climbed to 61.5, and consumer confidence hit a new two-year high of 74.4. The dollar reacted favorably, hitting new highs for the year, while gold slipped to $1,083.80 an ounce.

Dow Jones Industrial Average ($DJI)

Despite the losses, the market has been establishing some really nice intraday trends over the past couple of weeks. The indices had been narrowly traded and choppy at the start of the new year, but since then the intraday action has widened and the follow-through has been more straight-forward.

Friday's session kicked off with a mild upside gap that was followed by two waves of upside before the channel from Thursday afternoon broke lower to trigger a late-morning reversal. The volume picked up nicely to confirm the move and the indices sold off steadily into noon before hitting support from previous 15 minute lows. A solid continuation pattern then formed along the lows with two waves of correction off the support before the downtrend resumed into 13:30 ET. The selloff that followed established an equal move compared to the morning's descent, which served as support going into the final hour of trade.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Friday at 10,067.33 with a loss of 53.13 points, or 0.53%. Home Depot (HD) was the Dow's best-performer. It rose 2.45%, followed by a 1.56% gain in Wal-mart (WMT), and a 0.90% gain in DuPont (DD). The Dow's worst-performers were Microsoft (MSFT) (-3.36%), Boeing (BA) (-3.13%), and Intel (INTC) (-2.61%).

The S&P 500 ($SPX) fell 10.66 points, or 0.98%, and closed at 1,073.87. Tenet Healthcare Corp. (THC) was the best-performer in the S&P 500, rising 7.36% in Friday's session. It was followed by a 3.39% gain in Peoples United Financial (PBCT), a 2.97% gain in Bard C R Inc. (BCR), and a 2.47% gain in Citigroup (C). Avery Dennison (AVY) was the worst-performer with a loss of 14.67%, while Sandisk (SNDK) fell 11.67%, and Airgas Inc. (ARG) fell 9.76%,

The Nasdaq Composite ($COMPX) fell 31.65 points, or 1.45%, and it closed at 2,147.35 on Friday. Urban Outfitters (URBN) was the Nasdaq-100's best performer. It rose 3.44%. It's worst-performer was Seagate Technology (STX) (-8.99%).

Nasdaq Composite ($COMPX)

January was the worst month the market has seen since it reversed course last March. The indices pushed through their 100 day simple moving averages last week, leaving them with more room for further downside during this week. It's likely to be a daytraders market though since we should start to see greater day to day overlap start to sneak in once again to make follow through from one session into the next more difficult for the overall market.

Economic Reports and Earnings Events Next Week

2010-01-29T19:29:00.001-08:00

Brought to you Toni Hansen
http://www.tonihansen.com

Economic Reports and Events This Week

Domestic:
Eastern Time Zone (GMT -5:00) (New York, Toronto)

Feb 1 8:30 AM Personal Income Dec
Feb 1 8:30 AM Personal Spending Dec
Feb 1 10:00 AM Construction Spending Dec
Feb 1 10:00 AM ISM Index Jan

Feb 2 10:00 AM Pending Home Sales Dec
Feb 2 2:00 PM Auto Sales Jan
Feb 2 2:00 PM Truck Sales Jan

Feb 3 7:30 AM Challenger Job Cuts Jan
Feb 3 8:15 AM ADP Employment Change Jan
Feb 3 10:00 AM ISM Services Jan
Feb 3 10:30 AM Crude Inventories 1/29

Feb 4 8:30 AM Initial Claims 01/30
Feb 4 8:30 AM Continuing Claims 01/30
Feb 4 8:30 AM Productivity-Prel Q4
Feb 4 8:30 AM Unit Labor Costs - Preliminary Q4
Feb 4 10:00 AM Factory Orders Dec

Feb 5 8:30 AM Nonfarm Payrolls Jan
Feb 5 8:30 AM Unemployment Rate Jan
Feb 5 8:30 AM Average Workweek Jan
Feb 5 8:30 AM Hourly Earnings Jan
Feb 5 3:00 PM Consumer Credit Dec

Domestic and Foreign:
Eastern Time Zone (GMT -5:00) (New York, Toronto)
Jan 31 17:30 AUD AiG Performance of Manufacturing Index JAN
Jan 31 17:30 AUD TD Securities Inflation JAN
Jan 31 EUR German Retail Sales DEC
Jan 31 19:30 AUD House Price Index Q4

Feb 01 02:45 EUR French Producer Prices DEC
Feb 01 03:30 CHF SVME-Purchasing Managers Index JAN
Feb 01 03:55 EUR German Purchasing Manager Index Manufacturing JAN
Feb 01 04:00 EUR Euro-Zone Purchasing Manager Index Manufacturing JAN
Feb 01 04:30 GBP Mortgage Approvals DEC
Feb 01 04:30 GBP Net Consumer Credit DEC
Feb 01 04:30 GBP Net Lending Sec. on Dwellings DEC
Feb 01 08:30 USD Personal Income DEC
Feb 01 08:30 USD Personal Spending DEC
Feb 01 10:00 USD ISM Manufacturing JAN ***
Feb 01 16:45 NZD Average Hourly Earnings Q4
Feb 01 19:30 AUD NAB Business Confidence DEC
Feb 01 22:30 AUD Reserve Bank of Australia Interest Rate Decision ***

Feb 02 04:30 GBP Purchasing Manager Index Construction JAN
Feb 02 10:00 USD Pending Home Sales DEC
Feb 02 17:00 USD ABC Consumer Confidence Jan 31
Feb 02 17:30 AUD AiG Performance of Service Index JAN
Feb 02 19:01 GBP Nationwide Consumer Confidence JAN
Feb 02 19:30 AUD Trade Balance DEC

Feb 03 03:55 EUR German Purchasing Manager Index Services JAN
Feb 03 04:00 GBP Purchasing Manager Index Services JAN
Feb 03 04:00 EUR Euro-Zone Purchasing Manager Index Services JAN
Feb 03 05:00 EUR Euro-Zone Retail Sales DEC
Feb 03 08:15 USD ADP Employment Change JAN
Feb 03 10:00 USD ISM Non-Manufacturing Composite JAN
Feb 03 16:45 NZD Employment Change Q4
Feb 03 16:45 NZD Unemployment Rate Q4
Feb 03 19:00 GBP Bank of England Interest Rate Decision ***
Feb 03 19:00 GBO Bank of England Asset Purchase Target ***
Feb 03 19:30 AUD Retail Sales DEC
Feb 03 19:30 AUD Reserve Bank of Australia Quarterly Monetary Policy Statement ***
Feb 03 19:45 EUR European Central Bank Interest Rate Decision ***

Feb 04 02:15 CHF Trade Balance DEC
Feb 04 06:00 EUR German Factory Orders DEC
Feb 04 10:00 CAD Ivey Purchasing Managers Index JAN
Feb 04 10:00 USD Factory Orders DEC
Feb 04 10:30 USD ICSC Chain Store Sales JAN
Feb 04 GBP Halifax House Prices JAN

Feb 05 00:00 JPY Leading Index DEC
Feb 05 04:30 GBP Producer Price Index Output JAN
Feb 05 06:00 EUR German Industrial Production DEC
Feb 05 07:00 CAD Net Change in Employment JAN ***
Feb 05 07:00 CAD Unemployment Rate JAN
Feb 05 08:30 USD Change in Non-farm Payrolls JAN ***
Feb 05 08:30 USD Unemployment Rate JAN ***
Feb 05 08:30 USD Average Hourly Earnings
Feb 05 12:00 USD Treasury Secretary Geithner Attends G-7 Meeting in Iqaluit, Canada
Feb 05 17:15 USD Consumer Credit DEC

*** Highly influential

Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed "medium to high impact".

Key Earnings Announcements This Week:

Monday, February 1, 2010
Before: AMG, ACV, CRNT, CYOU, DEP, EPD, XOM, GCI, HAE, HEW, HUM, MDU, MOG.A, NI, ONB, SOHU, SYY
During: -
After: ADVS, APC, ARRY (?), BPL (?), CPX (?), CCK, DST, EXTR, HOLX, ICUI, LOCM, MNKD, NOA, OCLR, OTTR (?), PMT, PCL, RGA, RCII, RTEC, SIMO, TUP, UNCA

Tuesday, February 2, 2010
Before: AMSC, AMB, AXE, ADM, ARTG, ARM, ADP, BEAV, BP, COCO, CPO, CMI (?), DHX, DOW, DHI, EMR, ETR, EVR, HHS, HSY, NRGY, KFT (?), LDR, LXK, MAN, MRO, HZO, MPEL, OSTK (?), PTRY, PCX, PNR, PBG, PRGO, RDWR, RRST, SMG, STEL, STE, SU, TECH (?), TNB, TDW, TKR, UTI, UPS, WHR, WEC
During: -
After: ACE, APKT, ACTU, AFL, AGAM (?), ADS, AJG, ATO, BRE, CHRW, CTRP, EXM (?), FISV, SOLR, IVAC, IRF, JKHY, JDSU, JLL, KNXA, LCRD, MANH, MTW, MEE, MMSI (?), MET, MIL, MYGN, NLC, NETL, NWSA, PXD, QSFT, RSYS, RENT (?), RVBD, SLGN SSD, TSO, TRMB, UNM, VASC, VRSN, VOCS (?), WBSN

Wednesday, February 3, 2010
Before: ALVR, ASCA, ARW, ATMI, AUDC, BECN, BDK, BCO, CSL, CMCSA, CVLT, DBD, ENB, HW, HNT, IP, IVR (?), ITG, ITT, LAZ, MHO, MMP, MKTX, NOV, NSTC, OIIM, PFE, RL, POWL, RVSN, ROP, R, SVVS, SGP (?), SLAB, TMO, TWX, TZOO, UMC, WU, WWW
During: -
After: NDN, AATI, AFFX, AKAM, AMP, NLY (?), AIZ, ATW, AVB, BBBB, CELL, BRS, BRCM, CDNS, CBG, CBL, CENT (?), CPC (?), CSCO, CNQR, CVTI, DLB, DBTK, DCP, ENTR, EFX, EQR, FEIC, FNF, FBN, GHDX, HAIN (?), HSTX, HRC, HMN (?), IEX, INSP, KIM, MKL (?), MEAS, WFR, MWW, NBIX, NEWP, NVLS, ONNN, OTEX, OPNT, OHB (?), PSEM, RBC (?), REG, RNOW, SGMO, SIGI, SSTI, SPTN, SFN, SPF, STLY, STLD, SYMM, THQI, TGI, TBI, URI, UFPI, VIRL, V, WLT, TGL, WSH, YUM

Thursday, February 4, 2010
Before: ABMD, AGN, LNT, ATK, AHII (?), ARJ, STST, AVP, BCE, BDC, BLC, BHE, BCRX, BW, BG, BKC, CRR, CI, CINF, CLX, CME, CNMD, DWSN (?), DTPI, DO, UFS, ELNK, ENTG, FLO, HGG, HI, HSP, ITWO (?), IPSU (?), RX (?), IVC, K, KNL, KLIC, LII, LZ, MA, MTRX, MMS, MDCI, MF, MSTR (?), MEND, MKSI, MGI, MCO, MPS (?), MWIV, NCR, NOC, NUS, CHUX, OHI (?), OMTR (?), PTIE (?), PMTI (?), PENN, PAS (?), POL, POWI, QUIX (?), RAI, RSTI, RDS.A, RGLD, RTI, SBH, SLE, SNA, SNE, SE, SPR, HOT, SPH, TEN, TBL, UTEK, WBC, WW (?)
During: CUB (?)
After: ARAY, ACTL, ATVI (?), ABCO, ALKS (?), ASEI (?), BMI, BEZ, BEBE, BBND, BFRM (?), BLKB, COGO, CNW, CYS (?), DNEX, DNB, EW, ESE, ESS, XIDE (?), FALC, FIS, FMC, HLIT, HA, ILMN, IN, XXIA (?), LQDT, LMNX, MTS, MCHP, MCRS, MAA, MTX, MPWR, MTSC, MFLX, NFG, N, EGOV, OPWV, OPXT, PCCC, PKI, PMC, PFWD, PTEC, PBI, PWAV, RAH (?), RMD, SFLY, SIMG, SLH, SRCL, SFSF, SUN, SNCR, TWLL, TSYS, TTWI, VARI (?), VRTX

Friday, February 5, 2010
Before: AET, AYE, AXL, AIV, BZH, BPO, BRKS, SUR, LRN, KELYA, MAG, MD, NNN, PPL, PBH, SXT, SPG, SEP, TE, TSN, VVI, WY, YRCW
During: -
After: E-

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.

Techs Lead Market Lower

2010-01-28T22:00:00.000-08:00

Techs Lead Market 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! Thursday was a busy day for the markets. Earnings season is in full swing and a lot of economic data and other news events have been impacting the market this week. The markets most recent session felt continued pressure from the bears. The indices had hit new 52-week highs just a few weeks ago, but is now poised to lose approximately 3% for the month of January. The indices plummeted a week ago, hitting daily price support at Friday's close. Since then they have been congesting along lows with slightly lower lows as the momentum of the selloff shifts.

The U.S. dollar hit a six and a half year high against the euro on Thursday with tech and energy shares leading the downside in the stock market. Oil and gold also fell. Crude oil futures ended the session on Thursday at $73.64 a barrel, while gold closed at $1,083.60 an ounce.

Dow Jones Industrial Average ($DJI)

The market opened on a weak note on Thursday. The futures had held the price resistance that hit at midnight the night before and they rolled over at highs going into the opening bell. The Labor Department released the latest data on first-time jobless claims at 8:30 am ET. Claims fell by 8,000 to 470,000 from a revised 478,000 last week. They had been expected to fall to under 450,000, so the news was disappointing. The four-week average of initial claims actually rose, hitting 456,250

The market had already turned lower ahead of the jobs data, but the momentum accelerated into the opening bell. The indices felt little relief until 11:30 am ET with the downtrend remaining strong throughout the morning. The pace did not even slowing enough to test the 5 minute 20 period simple moving average until mid-day. After a final push lower into 11:30 ET, the indices bounced and hugged the upper channel line from the downtrend. This created a Phoenix™ buy formation that triggered soon after 12:30 ET and finally allowed the indices to break through their 5 minute 20 period simple moving averages.

S&P 500 ($SPX)

The S&Ps and Dow had the strongest corrections off the lows. The Nasdaq was weighed down by technology shares. This sector alone ended up finishing the day lower by about 3%. Nevertheless, even the Nasdaq managed to recover some of its morning losses by the closing bell. The afternoon reversal was formed with an initial wave of buying out of the Phoenix™, followed by a pullback into 14:00 ET and then a second push higher into 15:30 ET. The indices then pulled back in the final 30 minutes of trade. The two-wave correction off the lows left the market still feeling bearish and the indices pulled back once again in afterhours trade.

Nasdaq Composite ($COMPX)

The Dow Jones Industrial Average ($DJI) ended the session on Thursday at 10,120.46 with a loss of 115.70 points, or 1.13%. 6 of the Dow's 30 index components posted a gain. Procter & Gamble (PG) was the best-performer with a gain of 1.43%. Bank of America (BAC) rose 1.19%. Boeing (BA) rose 1.02%. Hewlett Packard (HPQ) was the worst-performer with a loss of 3.36%. American Express (AXP) fell 3.21%. Caterpillar (CAT) was the third-worst performer with a loss of 2.96%.

The S&P 500 ($SPX) fell 12.97 points, or 1.18%, and closed at 1,084.53. Eastman Kodak (EK) was the S&P 500's best-performer. It rose 24.63% after beating earnings expectations. Cardinal Health (CAH) followed with a gain of 5.11%, while Regions Financial (RF) rose 4.21%. Qualcomm Inc. (QCOM) was the worst-performer with a loss of 14.24% after it offered a very cautious outlook and several analysts cut their price targets for the stock. Motorola (MOT) was the second-worst with a loss of 12.43%.

The Nasdaq Composite ($COMPX) fell 42.41 points, or 1.91%, and it closed at 2,179.00 on Thursday. Only 10 out of the 100 Nasdaq-100 components posted a gain for the day. The top gainer was Amazon.com (AMZN), which rose 2.67%. Citrix Systems (CTXS) followed with a gain of 1.74%. Qualcomm (QCOM) was the worst-performer. Flextronics Intl (FLEX) followed with a loss of 7.04%, while Symantec Corp. (SYMC) fell 6.45%, and LAM Research (LRCX) fell 6.08%.

One lingering question was answered when Federal Reserve Chairman Ben Bernanke won confirmation by the Senate for a second term by a vote of 70-30. This had been a source of speculation throughout the week. The market didn't find any relief in the news, however. As we head into Friday's session, the market is still testing the week's lows afterhours going into 12:30 am ET. As I wrote on several occasions earlier this month, January is a typical correction period for the market and even though it got off to a slow start, that tendency has really followed through over the past two weeks. Since in this case the correction is a correction from the uptrend that had been in place since last March, we are now looking for it to hold this level of highs on the monthly time frame.

Fed Announcement Fails to Break Indices Out of Low-Level Range

2010-01-28T00:25:00.001-08:00

Fed Announcement Fails to Break Indices Out of Low-Level 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! Wednesday was one of the least reactive Fed days I've seen in a very long time. The Federal Open Market Committee kicked off its two-day meeting on Tuesday, which was a more active session than usual on the first day of a two-day meeting, but the market failed to maintain that level of interest heading into Wednesday's interest rate announcement.

A typical rate announcement day is met with upside in the morning, a slowdown over noon and then three strong waves of reaction following the news. The index futures had been trading lower into 4:00 am ET, but then turned higher into 7:00 am ET to allow the indices to begin the regular session relatively unchanged. Even though the market continued to push higher into the first correction period at 9:45 ET, it wasn't enough to create a larger price reversal and the market struggled throughout the morning.

Dow Jones Industrial Average ($DJI)

After hitting a new low for the session at the 10:15 ET correction period, the volume dropped off sharply. The indices fell into a very choppy trading range that lasted until the early afternoon. It is not common for the markets to offer any strong intraday trend move directly ahead of the Fed, but the Nasdaq Composite did manage to form a decent breakdown strategy out of the 13:00 ET correction period that led to a slightly lower low before pulling higher once again into the news.

The indices began to hug the 5 minute 20 period simple moving average shortly after 13:30 ET. This created a Phoenix™ buy formation, but the trigger corresponded to the Fed announcement, creating a higher risk setup. It did follow through, but traders would have had to have contended with extreme market volatility along the way.

S&P 500 ($SPX)

The follow through on the Phoenix™ created the first leg of reaction on the 5 minute time frame. This move took the indices back into morning highs in the S&P 500 and Dow Jones Industrial Average. This rally also held resistance perfectly at the 5 minute 200 sma. The Nasdaq was stronger and managed to retrace nearly all of the losses from Tuesday's fall off highs.

The second reactionary move took place heading into 15:00 ET. This created the opportunity for traders to begin to position themselves for the anticipated third move in the direction of the initial reaction. In this case it meant another wave of buying. The 5 minute 20 sma served as support and the market pushed to new intraday highs before correcting slightly off of those highs in the final 15 minutes of trade. The buying resumed at a slower pace following the closing bell until midnight.

Nasdaq Composite ($COMPX)

Financials were the day's best performers. These were followed by solid gains in both information technology and health care.

The Dow Jones Industrial Average ($DJI) ended the session on Wednesday at 10,19236.16 with a gain of 41.87 points, or 0.41%. The top performers were Boeing (BA) (+7.31%), Bank of America (BAC) (+2.84%), J.P. Morgan (JPM) (+2.32%), and Kraft (KFT) (+2.13%). The worst performers were Caterpillar (CAT) (-4.32%), Alcoa (AA) (-1.77%), United Technologies (UTX) (-1.26%), and Disney (DIS) (-1.15%). CAT's weakness came after beating bottom line estimates, but announced that it expects a dismal 2010.

The S&P 500 ($SPX) rose 5.33 points, or 0.49%, and closed at 1,097.50. Devry Inc. (DV) (+12.73%) was the best-performer in the S&P 500. It was followed by a 10.14% gain in Rockwell Automation (ROK) and an 8.26% gain in Moodys Corp. (MCO). U.S. Steel (X) was the worst performer in the S&P 500. It fell 6.07% following sharp selling on Tuesday as well.

The Nasdaq Composite ($COMPX) rose 17.68 points, or 0.80%, and it closed at 2,221.41 on Wednesday. Flextronics Intl. (FLEX) (+8.07%), Gilead (GILD) (+7.06%), Altera Corp. (ALTR) (+5.80%), and Apollo Group (APOL) (+3.67%) were the best performers in the Nasdaq-100. MIllicom Intl Cellular (MICC) (-3.12%), Foster Wheeler (FWLT) (-2.56%), and Adobe (ADBE) (-2.36%) were the worst performers in this index.

This support zone on the daily time frame at the S&P 500's and Dow's 100 day sma will continue to impact price action into the weekend. Unless news leads the way, the market is going to want to hold this level, but a strong price rally remains unlikely. The slightly lower lows on Wednesday have helped shift the momentum on the selloff, but this shift is relatively brief so far, so the market should continue to reward daytraders over swingtraders for the moment.

Market Awaits Wednesday's Fed Announcement

2010-01-26T19:22:00.000-08:00

Market Awaits Wednesday's Fed Announcement

(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! Sharp selling last week had left the indices oversold heading into this week, but the pace of the selling has meant that the market would favor intraday setups versus decent swing or position trade triggers. This has been proven to be the case with Tuesday's session continuing a congestion along daily support. This support can most clearly be seen in the S&P 500 and Dow Jones Industrial Average. Both have hit their 100 day simple moving averages. The Nasdaq Composite has retraced its gains to a lesser degree thanks to its stronger breakout heading into January, but still found support this week at the middle of November and December's trading range.

Dow Jones Industrial Average ($DJI)

Even though the market is forming a period of congestion on the 60-minute time frame, the session was a lot more active than you would normally expect for the first day of a two-day Fed meeting. Some of this increase was due to earnings season kicking into full gear, but the morning's economic data also played a major role. The market had remained weak going into the opening bell and clung to Friday's closing lows for the first 30 minutes of the day after selling off following the 9:00 am ET release of the S&P/Case-Shiller home price index.

The S&P/Case-Shiller home price index tracks home prices in 20 major U.S. cities. According to the report, home prices fell 0.2% in November, while October's prices were revised from "unchanged" to a decline of 0.1%. Economists had been expecting prices to rise 0.1%. On a seasonally adjusted basis, the index did rise 0.2% in November. Since November 2008 prices were down 5.3%. In the previous one-year period prices had dropped 18.2%. The market remained depressed until the 10:00 am ET consumer confidence data.

At 10:00 the Conference Board reported that its reading of U.S. consumer confidence rose for the third consecutive month in January and also beat expectations, sending it to a 16-month high of 55.9. It had hit a record-low of 25.3 11 months ago. Prior to the economic meltdown of the past several years, however, the average stood at 95. The "present situation index", which had averaged 99, rose from 20.2 last month to 25.0.

The market jumped quickly higher following the 10:00 ET data and the indices were back to testing the prior afternoon's highs by the time the 10:15 ET correction period hit. This resistance, combined with the correction period, pushed the market into a range for the next hour. Volume dropped as the indices congested at intraday highs and the markets followed up on this bullish development by breaking higher into noon.

S&P 500 ($SPX)

The trading range from the correction was not the most ideal way for a continuation pattern to form, even though it still offered a confirmation trigger into 11:30. A clear, second low did not form in the S&Ps and Dow within the trading range and this played a role in how the mid-day breakout panned out. Instead of following through with stronger-than-average upside momentum, a steady climb began. This climb kept pace with the 5 minute 20 period simple moving average. This can make it more difficult to time and hold a trade into a target zone, because when this type of trend does break lower it can wipe out all gains from a breakout in a matter of minutes.

Nevertheless, in Tuesday's session, the indices did push to afternoon target levels by continuing to climb into Friday morning's lows, which served as a strong price resistance level that hit with the 13:00 ET correction period. The market did not reverse as quickly as it could have off this level. It dropped quickly to begin with, but the 5 minute 20 sma held and created a retest of the mid-day highs. This gave the bulls a second chance to lock in gains before the stronger selloff kicked in along with the 14:00 ET correction period.

Take a look at the 5 minute time frame and you will see that when the selling did pick up, it wiped out all the breakout's gains in only a third to a half the time it took to obtain them in the first place. A gradual bounce into the 5 minute 20 sma and 15:00 ET correction period created a second wave of selling that took back the remainder of the day's gains and left the indices with a close in the lower quarter to third of the day's range.

Nasdaq Composite ($COMPX)

The Dow Jones Industrial Average ($DJI) ended the session on Monday at 10,194.29 with a loss of 2.57 points, or 0.03%. Travelers (TRV) was the best-performer in the Dow following earnings. It rose 2.74%. Wal-Mart (WMT) followed with a gain of 1.38%, while Caterpillar (CAT) rose 1.29%. The biggest loser was J.P. Morgan (JPM), which fell1.96%. Verizon (VZ) shed 1.66%. Intel (INTC) lost 1.57%.

The S&P 500 ($SPX) fell 4.61 points, or 0.42%, and closed at 1,092.17. Tellabs (TLAB) was the best-performer in the S&P 500 with a gain of 11.69% after it announced earnings. Lexmark Intl. (LXK) posted a gain of 7.45%, while Sherwim Williams Co. (SHW) rose 6.64%, and Zions Bancorporation (ZION) rose 6.47%. United States Steel (X) was at the opposite end of the spectrum with a loss of 11.77% as it continued the selloff that began last Wednesday. As in the Dow, the financials were also among the worst-performers in the S&P 500. Regions Financial (RF) was the second-worst performer with a loss of 7.18%.

The Nasdaq Composite ($COMPX) fell 7.07 points, or 0.32%, and it closed at 2,2 on Monday. First Solar (FSLR) was the best-performer in the Nasdaq-100 with a gain of 3.05%. Flextronics Intl. (FLEX) was the worst-performer. It fell 4.92%.

On Wednesday the Fed will conclude its 2-day meeting and announce its latest interest rate decision. The rates are likely to remain unchanged, so the focus will once again be upon the accompanying policy statement for clues on if and how its current policy may shift over the course of the year.

A typical Fed-announcement day begins with strength. Volume then drops off as activity slows in the early afternoon heading into the announcement. This takes place at approximately 2:15 ET. The reactionary moves usually come in three waves and on two time frames. There is an initial reaction, a counter-move that can be stronger than the initial reaction, and then a third shift that typically turns the market back towards their initial bias. This plays out on a 1-2 minute time frame and then repeat on the first time charts whereas the first 5 minute move consists of the 3-wave sequence from the 1-2 minute charts. Use extreme caution on the smaller time frame reactions immediately following the announcement because pricing data can be unreliable and your ability to execute at a desired price level will be hindered by the spike in volatility.

In addition to earnings and economic reports, something else to keep an eye on in the coming week is a tentatively scheduled on the topic of President Obama's proposed "crackdown" on big banks and their investment practices.

Trading the Fed-Rate Decision

2010-01-26T19:19:00.001-08:00

On Wednesday the Fed will conclude its 2-day meeting and announce its latest interest rate decision. The rates are likely to remain unchanged, so the focus will once again be upon the accompanying policy statement for clues on if and how its current policy may shift over the course of the year.

A typical Fed-announcement day begins with strength. Volume then drops off as activity slows in the early afternoon heading into the announcement. This takes place at approximately 2:15 ET. The reactionary moves usually come in three waves and on two time frames. There is an initial reaction, a counter-move that can be stronger than the initial reaction, and then a third shift that typically turns the market back towards their initial bias. This plays out on a 1-2 minute time frame and then repeat on the first time charts whereas the first 5 minute move consists of the 3-wave sequence from the 1-2 minute charts. Use extreme caution on the smaller time frame reactions immediately following the announcement because pricing data can be unreliable and your ability to execute at a desired price level will be hindered by the spike in volatility.

Note: In addition to earnings and economic reports, something else to keep an eye on in the coming week is a tentatively scheduled on the topic of President Obama's proposed "crackdown" on big banks and their investment practices.

Market Selloff Hits a Bump

2010-01-26T01:05:00.001-08:00

Market Selloff Hits a Bump

(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 major indices were nearly in free fall mode throughout the better part of last week. In fact, they ended lower on Friday with their worst weekly losses since hitting last March's lows. As I mentioned this weekend, this action increased the overall risk on Monday for traders that focus upon setups forming on time frames greater than the 5 minutes charts. The pace of the decline will make a strong and sustainable recovery difficult this week, while the degree of the selloff so far has limited downside potential until the markets have a chance to catch their breath.

The index futures traded in a range throughout the evening on Sunday and into the early morning hours on Monday. They broke higher at approximately 2:45 am ET. This is not a typical correction period for the markets, but the breakout confirmed with an increase in volume heading into 3:00 am ET. Three waves of buying on a 5 minute time frame took the indices into resistance at the 6:00 ET correction period. The market reclaimed the gain made during this breakaway rally by 8:00 am ET and then began to congest heading into Monday's opening bell.

Dow Jones Industrial Average ($DJI)

Two waves of correction off the 8:00 am ET support zone set the tone for a bearish open on the 5 minute charts despite a minor gap higher. This range continued with declining volume into 10:00 am ET, at which point the S&P 500 and Dow Jones Industrial Average broke sharply lower. Despite the overall weakness, the Nasdaq managed to hold its own range awhile longer. In addition to the two-wave correction in the premarket, it formed another comparable pattern from the opening bell into 10:30 am ET.

The indices resumed their selloff out of the 11:00 ET correction period. Although the pace of the selling was strong, volume failed to confirm it. Once the gap zone closed, the indices turned around. The entire morning selloff created a Phoenix™ buy setup on the 15 minute time frame in both the S&Ps and Dow. Notice in the charts that both indices slid lower at an equal distance from their 15 minute 20 period simple moving averages. When such a channel breaks, it offers a high probability setup for at least a two to one ratio on reward versus risk. This potential increases if the pullback that hugs the moving average retraces less than 50% of the upside move off lows as it hugs that resistance.

This was not the case in Monday's session. The retracement had nearly closed the morning's gap, so this created greater resistance at the early morning highs when the larger Phoenix™ setup followed through. It did end up hitting the two to one reward level, but just barely. Those morning highs held well and the market pulled back once again in the final hour of trade. This pullback meant that the initial gap plus the afternoon rally created a two-wave continuation pattern for a short into the close out of that 15:00 ET correction period and into afterhours trade.

The indices went a bit crazy afterhours on Apple's earnings. Even though prices returning to closing levels by 18:00 ET, the index futures sold off once again into midnight before finding some support into the 2:00 am ET correction period.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Friday at 10,196.86 with a gain of 23.88 points, or 0.23%. Intel (INTC) was the best-performer with a gain of 2.06%. Caterpillar (CAT) came in second with a gain of 1.64%. General Electric (GE) rose 1.61%. At the opposite end of the spectrum was a loss of 2.07% in American Express (AXP), a 0.71% loss in United Technologies (UTX), and a 0.65% loss in Kraft (KFT).

The S&P 500 ($SPX) rose 5.02 points, or 0.46%, and closed at 1,096.78. Ciena (CIEN) was the top-performer in the S&P 500, rising 6.70%. A K Steel Holding Corp. (AKS) followed with a gain of 5.35%, while Ford (F) rose 4.85% after it announced that it would be adding 1,200 new jobs in Chicago. Capital One Financial Corp. (COF) was again a top loser, falling 3.78%. International Game Technology (IGT) fell 3.20%. Southwest Airlines (LUV) fell 3.08%.

The Nasdaq Composite ($COMPX) rose 5.51 points, or 0.25%, and it closed at 2,210.80 on Monday.Liberty Global Inc. (LBTYA) had the best performance in Monday's session in the Nasdaq-100. It rose 8.11%. Seagate Technology (STX) came in at a distant second with a gain of 2.83%. Apple Computers (AAPL) came in third with a gain of 2.70 ahead of earnings. It is expected to announce a new tablet computer on Wednesday and investors are anxiously awaiting the news conference. The worst performers in the Nasdaq-100 were Warner Chilcott (WCRX) with a loss of 2.81%, Activision Blizzard (ATVI) with a loss of 2.41%, and Starbucks (SBUX) with a loss of 2.23%.

Crude oil futures settled higher by 72 cents at $75.26 a barrel.

Nasdaq Composite ($COMPX)

My outlook for today's session is not much different that yesterday. The market is still extended on the downside, but the momentum has not shifted enough at lows heading into 3:00 am ET to attract me to long positions for anything greater than a daytrade on the shorter, intraday time frames, such as the 5 minutes charts that triggered the 2:00 am ET 2B reversal in the Nasdaq futures this morning. Earnings season is picking up though, so we should be able to find a number of momentum plays in stocks that will not be as heavily influenced by the overall market. The 10:00 am ET consumer confidence data will be one of the main things to keep an eye on intraday. Tuesday is also the first day of a two-day Fed meeting. This will help to keep volatility lower until Wednesday's rates announcement.

2010-01-24T18:48:00.001-08:00

Indices Suffer Worst Weekly Decline Since March Lows

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

Good day! As speculation abounds as to whether or not Federal Reserve chairman Ben Bernanke will be serving another term, on Friday the market plummeted to new lows for the year thus far. Over the course of the past three days the Dow has gone from the best closing high since last March to its strongest selloff since that same period.

The market has been flirting with monthly resistance levels since the start of the past quarter, but it failed to hold up during the most recent correction month for the markets. As I mentioned several weeks ago, major reversals often take place in January. The last correction month was October, in which the pace of the upside merely slowed, but did not reverse. This time around, the market has failed to be wowed by the latest earnings data and attempts to push to slightly higher highs on light volume finally gave way to extreme profit-taking and panic as the late-comers rushed to limit losses and those holding on from better price levels rushed tto secure as much of their gains as possible.

Dow Jones Industrial Average ($DJI)

The selloff that began on Wednesday and established a second wave of selling into Thursday did not hesitate on Friday morning to confirm that the larger 60-minute range was indeed broken. Despite rounding off slightly in mid-day action on Thursday, the index futures were unable to recover any lost ground overnight and instead opened lower on high volume. The S&P 500 had been basing with the other two indices in premarket trade, but it opened and formed a textbook continuation triangle in the early morning that triggered giong into 10:00 am ET.

The 10:15 ET correction period held as the morning low, but another short triggered out of 11:30 ET. This can be seen clearly on the S&P 5 minute time frame as well with a shift in momentum along the zone of the gap closure. This continued with a low-level base into the early afternoon. After that point the momentum built on itself as panic set in with the break of the morning lows. For the second day in a row the Dow ended with a loss greater than 200 points.

The day's news events did not help lighten the mood. Companies posting good earnings were overshadowed by rising unemployment and futher news from the While House. Early in the day the market was hit by the Labor Department's announcement that unemployment levels rose in 43 states, as well as the District of Columbia, in December. Four states hit record highs. The top two were South Carolina with an unemployment rate of 12.6% and Florida, which hit 11.8%. Overall, however, Michigan's unemployment rate of 14.5% remains the highest. The mid-western "prairie states" have weathered the economic strains the best, despite what Mother Nature has been throwing at them in recent weeks. Respectively, North and South Dakota have the lowest unemployment levels at 4.4% and 4.7%.

In other news, President Obama held a "town hall" meeting in the late afternoon that dealt primarily with his plan to restrict the speculative activities of the big banks. His plan had originally been proposed on Thursday and was cited as an instigato for the day's decline. Technical factors relating to the change in pace and time of the year were still strong motivators, but it's hard to deny the impact this announcement had as well, particularly when the selling pressure increased as Obama took the podium.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Friday at 10,172.98 with a loss of 216.90 points, or 2.09%. Once again, it was surprising that any of the Dow's index components managed to keep their head's above water, but in Friday's session the stock prices for four companies still managed to post a gain. Procter & Gamble (PG) rose 0.79%, General Electric (GE) closed higher by 0.56%, McDonalds (MCD) gained 0. 30%, and Wal-Mart (WMT) rose 0.04%. GE and MCD both had earnings that beat expectations. The heaviest losses were experienced by American Express (AXP) (-8.47%), Alcoa (AA) (-5.96%), Caterpillar (CAT) (-4.57%), and Intel (INTC) (-4.46%). AA's losses came despite the fact that it tripled its quarterly net income. The Dow ended the week lower by 4.1%. Since Wednesday, however, it has fallen 5.2%.

The S&P 500 ($SPX) fell 24.72 points, or 2.21%, and closed at 1,091.76. Intuitive Surgical Inc. (ISRG) was the best-performer with a gain of 11.78%. Huntington Bancshares Inc. (HBAN) was the second-best performer with a gain of 3.53%. Johnson Ctls. Inc. (JCI) came in third with a gain of 2.18% despite giving up most of its opening gap gains. Advanced Micro Devices (AMD) was the worst performer with a loss of 12.35%. Capital One Financial (COF) was the second-worst with a loss of 12.11%. SLM Corp. (SLM) (-11.94%) and Western Digital (WDC) (-10.05%) also posted losses over 10%. The S&P 500 overall ended the week loser by 3.9%.

The Nasdaq Composite ($COMPX) fell 60.41 points, or 2.67%, and it closed at 2,205.29 on Friday. ISRG was the best-performer in the Nasdaq-100. 6 other Nasdaq-100 components posted a gain. Celgene Corp. (CELG) was the second-best performer with a gain of 1.35%. The worst-performers were Joy Global Inc. (JOYG) (-8.18%), Applied Materials Inc. (AMAT) (-7.00%), Marvell Technology Group (MRVL) (-6.18%), and Klac-Tencor Corp. (KLAC) (-6.06%). Google (GOOG) posted earnings on Thursday afternoon, but still failed to impress. Despite strong fourth-quarter earnings with revenue that exceeded analysts' expectations, GOOG fell 5.66% and was the Nasdaq-100's 6th worst-performer. The Nasdaq's losses for the week amounted to 3.6%. All three of the major indices are now down more than 2% for the year-to-date.

In other markets, crude oil futures are down 6.07% for the month and closed lower by $1.54 a barrel on Friday to end the session at $74.54 a barrel, while gold is now off 0.59% on the year. It fell $13.50 on Friday and closed at $1,089.70 an ounce. The 10-yr. Treasury yield ended at 3.6%, down 6.38% year-to-date.

Nasdaq Composite ($COMPX)

Whenever any security or the overall market drops as far and as quickly as the indices did last week, they have a very difficult time recovering quickly. Even when you see a sharp counter-move, they will still tend to turn back around and at least correct through a trading range on the larger time frames. This is going to mean that taking swing trades, and even position trades, as buy strategies is going to continue to be higher risk over the course of the next several weeks. Neverthless, the indices are now very extended on the downside on the 60-minute time frame. We can still see some slightly lower lows at the start of the week, but I suggest sticking to shorter-term, intraday positions for now and avoid overnight holds in general. There will be some exceptions in securities that are not trading in sync with the overall market, but be aware that exceptions are always higher risk when the overall market is not behind them.

Economic Reports and Earnings Events This Week

2010-01-24T17:29:00.001-08:00

Brought to you by Toni Hansen.
http://www.tonihansen.com

Economic Reports and Events This Week

Domestic:
Eastern Time Zone (GMT -5:00) (New York, Toronto)

Jan 25 10:00 AM Existing Home Sales Dec

Jan 26 9:00 AM Case-Shiller 20-city Index Nov
Jan 26 10:00 AM Consumer Confidence Jan
Jan 26 10:00 AM FHFA Home Price Index Nov

Jan 27 10:00 AM New Home Sales Dec
Jan 27 10:30 AM Crude Inventories 1/22
Jan 27 2:15 PM FOMC Rate Decision 1/27

Jan 28 8:30 AM Initial Claims 01/23
Jan 28 8:30 AM Continuing Claims 01/16
Jan 28 8:30 AM Durable Orders Dec

Jan 29 8:30 AM Chain Deflator-Adv. Q4
Jan 29 8:30 AM Employment Cost Index Q4
Jan 29 8:30 AM GDP-Adv. Q4
Jan 29 8:30 AM Chain Deflator-Adv. Q4
Jan 29 8:30 AM Employment Cost Index Q4
Jan 29 9:45 AM Chicago PMI Jan
Jan 29 9:55 AM University of Michigan Sentiment Jan

Domestic and Foreign:
Eastern Time Zone (GMT -5:00) (New York, Toronto)
Jan 23 19:30 AUD Producer Price Index Q4

Jan 25 02:00 EUR German GfK Consumer Confidence Survey FEB
Jan 25 AUD Australian Markets Closed for Australia Day Holiday
Jan 25 21:00 NZD Credit Card Spending DEC

Jan 26 02:00 CHF UBS Consumption Indicator DEC
Jan 26 04:00 EUR German IFO - Business Climate JAN
Jan 26 04:00 EUR German IFO - Current Assessment JAN
Jan 26 04:00 EUR German IFO - Expectations JAN
Jan 26 04:00 EUR Euro-Zone Current Account NOV
Jan 26 04:30 GBP Gross Domestic Product Q4 ***
Jan 26 04:30 GBP BBA Loans for House Purchase JAN
Jan 26 09:00 USD S&P/Case-Schiller Home Price Index NOV
Jan 26 10:00 USD Consumer Confidence JAN ***
Jan 26 18:50 JPY Merchandise Trade Balance Total DEC
Jan 26 18:50 JPY Adjusted Merchandise Trade Balance
Jan 26 18:30 JPY Merchandise Trade Exports DEC
Jan 26 18:50 JPY Merchandise Trade Imports DEC
Jan 26 EUR German Consumer Price Index JAN ***
Jan 26 19:00 EUR German Consumer Price Index - EU Harmonized JAN ***
Jan 26 19:30 AUD Consumer Prices Index Q4 ***
Jan 26 19:30 AUD Consumer Prices Index RBA Trimmed Mean Q4
Jan 26 19:30 AUD Consumer Prices Index RBA Weighted Median Q4

Jan 27 00:00 JPY Bank of Japan Monthly Report
Jan 27 06:00 GBP U.K. CBI Distributive Trades JAN
Jan 27 10:00 USD New Home Sales DEC ***
Jan 27 14:15 USD Federal Open Market Committee Interest Rate Decision ***
Jan 27 15:00 NZD Reserve Bank of New Zealand Interest Rate Decision ***
Jan 27 18:00 AUD Conference Board Leading Index NOV
Jan 27 18:50 JPY Retail Trade DEC
Jan 27 19:30 AUD Private Sector Credit DEC

Jan 28 03:55 EUR German Unemployment Change JAN ***
Jan 28 03:55 EUR German Unemployment Rate JAN ***
Jan 28 05:00 EUR Euro-Zone Consumer Confidence JAN
Jan 28 08:30 USD Durable Goods Orders DEC ***
Jan 28 08:30 USD Durables Ex-Transportation DEC ***
Jan 28 16:45 NZD Trade Balance DEC
Jan 28 18:30 JPY Tokyo Consumer Price Index JAN ***
Jan 28 18:30 JPY Tokyo Consumer Price Index Ex-Fresh Food JAN
Jan 28 18:30 JPY Tokyo Consumer Price Index Ex-Fresh Food, Energy JAN
Jan 28 18:30 JPY National Consumer Price Index DEC ***
Jan 28 18:30 JPY National Consumer Price Index Ex-Fresh Food JAN
Jan 28 18:30 JPY National Consumer Price Index Ex-Fresh Food, Energy JAN
Jan 28 18:30 JPY Jobless Rate DEC ***
Jan 28 18:30 JPY Job-To-Applicant Ratio DEC
Jan 28 18:30 JPY Household Spending DEC
Jan 28 GBP Nationwide House Prices JAN
Jan 28 19:01 GBP GfK Consumer Confidence Survey JAN
Jan 28 19:30 AUD Private Sector Credit DEC

Jan 29 04:00 EUR Euro-Zone Unemployment Rate DEC
Jan 29 05:30 CHF KOF Swiss Leading Indicator JAN
Jan 29 08:30 CAD Gross Domestic Product NOV
Jan 29 08:30 USD Gross Domestic Product (Annualized) Q4 ***
Jan 29 08:30 USD Personal Consumption Q4
Jan 29 08:30 USD Core Personal Consumption Expenditure Q4
Jan 29 09:55 USD University of Michigan Consumer Confidence JAN ***
Jan 29 16:15 USD Bloomberg Financial Conditions Index JAN

*** Highly influential

Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed "medium to high impact".

Key Earnings Announcements This Week:

Monday, January 25, 2010
Before: AKS, ACV (?), BOH, CNH, ETN, HAL, ERIC, PVTB, DGX, RCL (?), SEE
During: -
After: ALB, AMGN, ATHR, CLDN, CR, ELS (?), GGG, HTLF, JEC, JDAS, KRC, MTXX (?), MSPD, NARA, OLN, PKG, PRXL, PLXT, RLRN, RLI, SLG, TXN, VMW, VLTR, ZION, ZRAN (?)

Tuesday, January 26, 2010
Before: AOS, ABC, AME, ASH, BHI, CRS, CVG, CBE, GLW, DD (?), EMC (?), ENR, FMER, FPL, FCX (?), GKSR, JNJ, KCI, MHP, NVS, NUE, BTU, RYN, RF, SHW, STE (?), TLAB (?), TRV, TUES (?), X, VZ, WAT, WFT, WTNY
During: ZNT
After: ALGT, ALTR, AMLN (?), BBOX, BXP, BKI, CLMS, ELY, CNI, CNS, CSGS, DV, GILD, HTCH, INFN, IDTI, KEYN, MRTN, MCK, MRCY, MTH, MOLX, NATI, NAL, PTV, WLGC, RFMD, RKT, SANM, TSFG, STLD (?), STM, SYK, TPX, TRMK, WMS, YHOO

Wednesday, January 27, 2010
Before: ABT, AMG (?), AAI, ATI, ARLP, APU, BJS (?), BLK, BA, CAT, GIB, COP, CFR, DSPG, EXP, FCFS (?), GD, HSY (?), HES, ITW, LCRY (?), MNI, MWV, MOG.A (?), NWPX (?), NYB, OSIS, PTEC (?), PJC, PX, RGS, ROK, RES, SAP, SEIC (?), SII, SO, STJ, SWK, TEL, UAUA, UGI, UTX, USAP, VLO, WLP, WTFC
During: EGN (?), SUSQ
After: ALGN, ACF, AMLN, AF, BYI, BMC, CBT (?), CTSX, CLD (?), COHU, CVD, CCI, CTS, DRE, ETFC, EWBC (?), ESIO, ETH, FLEX, FTNT, HBI, HRS, HXL, HOKU, IBKC, ISIL, KEX, KNX, LRCX, LSTR, LOGM (?), LSI, MLNX, MEOH (?), MUR, NFLX, NE, NSC, OMER (?), OI, PSSI, QCOM, RYL, SHOR, JAVA (?), SRDX, SYMC, TER, TTEK, TCBI, TLGD (?), TSCO, VAR, VIRL (?), WERN

Thursday, January 28, 2010
Before: FLWS, MMM, ACXM (?), ALK, ATK (?), MO, ARP, ACAT (?), ABFS, AZN (?), T, AUO (?), AN (?), AVT, BLL, BAX, BDX, BMS, BMY, BC, CCMP, CP, CAH, CSH, CELG, CEVA, CHTT, (?) CHKP, CRUS, CXG, CL, CLP, CMCO, CNX, CVBF (?), CY, DHR, DLX, D, EK, LLY, RDEN (?) EQT, EL, FCF, F, BEN, GNTX, GR, HSC, HHS (?), HP, HUB.B (?), ISCA, IVZ, JNS, JBHT (?), JBLU, KSU, KMT, KNSY, KSP (?), FSTR (?), LLL, LANC, LIFE, LMT, MKC, MJN, MEG, MPW, MNRO, MOT, LABL (?), NOK, NVR (?), OXY, ODFL, ORI, OXPS, OSK, OSTK (?), PII, POT, PG, QUIX (?), RTN, COL, RCL, SBNY (?), SNA (?), SNE (?), SY, TROW (?), TSM, TDY, TXT, TWC, TRCR, TYC, UMPQ, UA, LCC, USAK, USG (?), WDR, WCC, WRLD, XEL, ZMH
During: -
After: PAR, ABAX, ADPT (?), ARG, AMZN, ANEN, AMCC, ARBA, AVID (?), AVCT (?), BCR (?), CA, CAMD, CALD, CAVM, CPHD, CHRT (?), CHRS, CB, CYN, COBZ, COHR, COLM, CPSI, CPWR, CYBS, CYMI, CYT, DRIV, DLLR, DNB (?), EMN, EXAR, FII, FFIN (?), FORM, GNW, GMCR (?), GHL (?), HUBG, INFA, ININ, ICO, JNPR, KLAC, LCRD (?), LSCC, LEG, MXIM, MCRL, MSFT, MIPS, NTY (?), OCLR (?), OMCL (?), OPLK (?), PKI (?), PMCS, QSII (?), QTM, RMBS (?), RHI, SNDK, SCSC, SBCF, SMTL (?), SWI (?), SXE, SPWRA (?), SNV, TLEO (?), TSRA, VSEA, VPRT, YRCW (?), ZNT

Friday, January 29, 2010
Before: ACI, ALV, AVY, CVX, DOV, FO, GHM, HON, HRZ, IDXX, MAT, NWL, NS, PCAR, PFS, SAIA, WL
During: -
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 Disappoints

2010-01-21T21:40:00.000-08:00

Market Disappoints

(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! As I was writing yesterday's column, the index futures were testing key resistance into midnight at 50% and 61.8% Fibonacci retracement levels and 15 minute 200 period simple moving averages. The overall pace of the really was more gradual than the previous descent, but we had seen such moves correct and then pick up greater steam on the second push. This had been the case heading into Tuesday morning. In yesterday's column, I pointed out that in order to see a break from the larger 60-minute trading range, ideally this slower momentum would hold under that 61.8% retracement. Even though the index futures still put in that second attempt to push higher after correcting from that zone into the 6:00 am ET correction period, the second rally out of that time zone was not able to break through that resistance zone.

Dow Jones Industrial Average ($DJI)

The Nasdaq-100 futures showed the greatest premarket strength, but when the S&P 500 and Dow Jones. Ind. Ave. futures pulled higher, they held the 15 minute 200 sma resistance. Then they created a two-wave congestion going into the opening bell. This means that they pulled back off the resistance, put in a higher low, bounced for a second move higher into 9:30 am ET, but with another smaller move. These two waves created the short trigger following the opening bell.

The market held the zone from the premarket action until after 10:00 ET. The bottom gave way at 10:20 ET with another extreme selloff reminiscent of Wednesday's morning collapse. As on Wednesday, the sharp selling was followed by continued downside, but at a more gradual pace. Support held at 11:45 ET when the indices hit equal move targets as compared to the previous day's descent.

The momentum continued to shift along the 5 minute 20 period simple moving averags before triggering a momentum reversal buy strategy coming out of the 13:00 ET correction period. The action was the strongest in the Nasdaq with a second wave of buying on the 5 minute time frame taking place at about 14:15 ET. The indices hit the 15 minute 20 period sma, however, and were unable to break through that zone, as well as the zone of price resistance caused by the morning's momentum shift. This resulted in a pull back to the lower end of the afternoon range in the final 90 minutes of trade.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) ended the session on Thursday at 10,389.88 with a loss of 213.27 points on Thursday, or 2.01%. Despite the extreme selloff, McDonalds (MCD) (+0.30%) and Travelers (TRV) (+0.04%) still managed to post small gains. MCD reports earnings ahead of Friday's open. At the other end of the spectrum, however, were major losses. This was particularly the case in the financials. J.P. Morgan (JPM) fell 6.59%, while Bank of America (BAC) shed 6.19%. Other stocks that are linked strongly to the dollar were also hit hard. As the dollar rose, Caterpillar (CAT) fell 4.87%. Alcoa (AA) lost 6.43%. The U.S. Dollar Index rose to 78.570.

The S&P 500 ($SPX) fell 25.55 points, or 1.89%, and closed at 1,116.48. Metals and materials stocks were the biggest decliners, but there were some areas of strength as well. Lauder Estee Cos. Inc. (EL) was the strongest S&P 500 component on Thursday. It broke higher on the weekly time frame to close with a gain of 9.16%. Ebay Inc. (EBAY) followed with a gain of 8.55% after it posted fourth-quarter earnings late Wednesday. Total Sys. Svcs. Inc. (TSS) was the worst-performer. It fell 11.93%. It was followed by a 9.90% loss in Legg Mason Inc., and a loss of 8.84% in United States Steel Corp. (X). Crude oil futures ended the session at $76.08.

The Nasdaq Composite ($COMPX) fell 21.56 points, or 1.12%, and it closed at 2,265.70 on Thursday. Seagate Technology (STX) was the best-performer in the Nasdaq-100. It rose 9.74%. EBAY was the second-best performer. Xilinx Inc. (XLNX) came in third with a gain of 5.47% after bouncing off the 100 day moving average. The biggest losers were Joy Global Inc. (JOYG) (-6.94%), Garmin Ltd. (GRMN) (-5.50%), and Logitech Intl. (LOGI) (-4.55%).

Nasdaq Composite ($COMPX)

Thursday's volume was the highest we have seen in several months, showing conviction in the selloff as the bulls paniced and raced to attempt to protect gains earned over several weeks that were given back in only a fraction of that time. Even though the markets triggered a technical sell setup, Obama's proposal for limiting the types of risk, as well as the size of that risk, that financial institutions can expose themselves to was cited as a major contributing force that allowed the financials to lead the downside on the session. Some of the examples that were given included prohibitions against allowing commercial banks to trade their own accounts as well as owning or investing in hedge funds.

The bulls were already skittish heading into the day, so even whiff of controversial news easily helps drive the market lower. In order for confirmation of a larger correction to occur, as opposed to this merely being another two-wave pullback on the 60 minute time frame, we need to see another slower rally or continuation of the momentum shift. Ideally, this will mean that the market does not attempt to break the previous highs and that any correction of Thursday's selloff holds that level. At this point, however, it is likely that this will be the case.

Even if the market managed to turn back around, the price action suggests that any attempt to push to new highs next week will fail, although another wider trading range is still possible. Buy setups in securities that are heavily influenced by the direction of the overall market should be met with increased caution, particularly for those who are swingtrading.

Market Holds 60-Minute Range, Falling Back to Lows

2010-01-20T23:41:00.000-08:00

Market Holds 60-Minute Range, Falling Back to Lows

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

Good day! The market reclaimed most of Tuesday's gains on Wednesday to continue to the 60-minute trading range that has been marked by wide swings from highs to lows and back again over the course of the past week and a half. The premarket action was subdued. The index futures had been selling off gradually since the previous afternoon. As in the several previous sessions, however, it was not until the opening bell rang that the momentum really increased. The 15 minute 200 simple period moving average, which also corresponded to 38.2% and 50% Fibonacci retracement levels, served as support in premarket and gave way at 9:30 am ET.

Dow Jones Industrial Average ($DJI)

The early morning descent picked up momentum into 10:30 ET and bounced slightly into the 10:15 ET correction period before hitting new lows on the session once again into 11:00 am ET. By this point the indices were once again retesting the lows of the 60-minute trading range. Unsurprisingly, this served as support and the market had a tough time attempting to break through it. Although the reaction was more gradual than the overall pace of the selloff, by midnight all three of the major index futures had recovered at least half of the losses from the drop off the previous day's highs.

So far this 60-minute trading range itself is displaying stronger bearish tendencies than bullish. We have yet to see any real change in momentum or a more minor retracement off a high or low within the range to give a high probability indication of the bias for the direction of a breakout. As I discussed earlier in the week, a slower upside move than the average within the range will indicate a higher probability of a break lower and vice versa. This is especially true if the correction holds under the 61.2% Fibonacci retracement level, and even more so if the retracement is under a 50% retracement before the channel for the correction breaks back to the outside channel of the range.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) fell 122.28 points on Wednesday, or 1.14%, to end the session at 10,603.15. IBM was the biggest loser. It fell 2.90%. Alcoa (AA) followed with a loss of 2.50%. Kraft (KFT) fell 2.14%. Only 6 of the Dow's components posted a gain. The top two were drug-makers Bank of America (BAC) (+1.04%) and Merck (MRK) (+1.01%). The drug makers were the top gainers following the election of Republican Scott Brown.

The S&P 500 ($SPX) fell 12.19 points, or 1.06%, and closed at 1,138.04. State Street Corp. (STT) was the best-performer in the S&P 500. It rose 7.13%. Northern Tr. Corp. (NTRS) was the second-best performer. It rose 5.73%. CSX Corp. (CSX) was the biggest loser. It fell 6.26%. Coach Inc. (COH) was the second-weakest with a loss of 5.61%.

The Nasdaq Composite ($COMPX) fell 29.15 points, or 1.26%, and it closed at 2,291.25 on Wednesday. Liberty Global Inc. was the best-performer in the Nasdaq-100. It rose 2.96%, followed by a 2.35% gain in Nii Holdings (NIHD). Only a dozen of the Nasdaq-100 components posted a gain. Wynn Resorts (WYNN), which had been a leader in recent weeks, was a top loser. It fell 4.43%. Ebay (EBAY) also lost 4.43%.

Nasdaq Composite ($COMPX)

Market Recovers Friday's Losses

2010-01-19T23:51:00.000-08:00

Market Recovers Friday's Losses

(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! Drug makers and health-care stocks led the market strongly higher on Tuesday. Massachusetts held a special election to fill the vacancy left following the death of Democratic Senator Edward Kennedy. This particular election stands out since the win by Republican candidate Scott Brown means that the Republicans can now filibuster the health care legislation, allowing for the introduction of compromises that would be more favorable to private-sector health care.

The market had ended last week with the largest one-day loss of 2010, but the index futures turned higher on Friday afternoon and kept going in Monday's abbreviated futures session. Even though they sold off in premarket trade, at 8:00 am ET they hit another solid low and turned higher on stronger momentum. The indices then formed a strong, two-wave continuation buy setup with a consolidation between 8:30 am ET to 9:30 ET that broke higher with the opening bell. An extreme momentum move followed as the indices soared into the zone of last week's highs. As expected, this zone served as very strong resistance and the buying slowed dramatically following the 10:15 ET correction period.

Dow Jones Industrial Average ($DJI)

Tuesday's reversal continued the larger 60-minute trading range with another "V" low. This continues to leave us without a strong bias for a breakout, however, since the pace on both Friday's selloff and Tuesday's rally were stronger-than-average. The most ideal development for a trading range break is to monitor the waves of action within the range itself for a slower-paced move. When a security has a more gradual pullback off the highs of a range than the average move within the range, then it will indicate a high probability for an upside breakout. On the other hand, a more gradual move higher off the lows of a range is the most favorable for a break lower.

Breakout are still common that do not offer this glimpse into the future via a change in momentum, but they have a much higher risk of breaking the channel only to pull back into it relatively quickly. At times this will merely be a retest of the channel before continuing in the direction of the initial breakout, but at other times the breakout will fail completely. Either situation can be problematic not only due to increased risk as a result of larger stop levels placed under the entire range, as opposed to the final portion of the range, but also the affect longer follow-through time can have upon a trader's patience and confidence.

The market rounded off at the upper end of the 60-minute trading range on Tuesday afternoon. This led to a selloff afterhours. So far the pace of that selloff has been more gradual that the morning's upside. For the range to break higher, it is ideal that the correction holds above a 50% retracement of the day's range.

S&P 500 ($SPX)

The Dow Jones Industrial Average ($DJI) rose 115.78 points on Tuesday, or 1.09%, to end the session at 10,725.43. Drug-makers Merck (MRK) (+2.91%) and Pfizer (PFE) (+2.62%) led the Dow. At the opposite end of the spectrum was J.P. Morgan (JPM), which fell 0.92%. Kraft (KFT) followed. It reversed course along with the rest of the market. Since it had posted a strong gain on Friday, however, this reversal was not a favorable one. It ended the session lower by 0.57% after Cadbury accepted its increased buy-out offer. Boeing (BA) and Alcoa (AA) were the only other two Dow components to post a loss, albeit minor ones.

The S&P 500 ($SPX) rose 14.20 points, or 1.25%, and closed at 1,150.23. Ciena Corp. (CIEN) was the best-performer in the S&P 500. It rose 11.01%. Williams Cos. Inc. (WMB) followed with a gain of 8.10%. Sprint Nextel Corp. (S) was the worst-performer with a loss of 3.66%.

The Nasdaq Composite ($COMPX) rose 32.41 points, or 1.42%, and it closed at 2,320.40 on Tuesday. Garmin Ltd. (GRMN) was the best-performer in the Nasdaq-100 with a gain of 5.61%. Apple (AAPL) was the second-best performer with a gain of 4.42%. Baidu (BIDU) was the worst-performer. It fell 5.74% after three days of strong gains on speculation of Google pulling out of China.

Nasdaq Composite ($COMPX)

Market Ends Week With Worst Day of 2010

2010-01-18T20:49:00.001-08:00

Market Ends Week With Worst Day of 2010

(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! Going into Friday's session, the indices were not showing a particularly strong resolve one way or the other. The index futures had three waves of selling into midnight, which created strong support into midnight (which I shared with FaceBook), but then it hit a snag at the 4:00 am ET correction period after a 2-wave correction off the lows. This came in short of the earlier highs, however, and by holding that level it started to finally show a larger bias in favor of the bears in premarket trade. Another three wave selloff followed into the 7:00 am ET correction period. The market then corrected once again into the opening bell.

The day's news, however, was not met with good cheer. J.P. Morgan (JPM) reported its quarterly earnings and the bottom gave way. Despite a late-day recovery, Friday's session was the largest daily loss of 2010. JPM posted both weaker-than-expected revenue and an uninspiring outlook despite quadrupling its fourth-quarter earnings. The financials ended up being among the day's worst-performers. Bank of America (BAC) led the Dow's losses, down 3.33%. JPM posted a loss of 2.26%. Intel (INTC) did not help matters. It was the Dow's second-worst performer with a loss of 3.17% following its Thursday afternoon earnings report even though it posted its most profitable quarter ever. In the Dow Jones Industrial Average ($DJI) on Friday, only Kraft (KFT) (+1.58%), Home Depot (HD) (+0.95%), and Pfizer (PFE) (+0.57%) posted gains. The index as a whole ended the session lower by 100.90 points, or 0.94%, to end the session at 10,609.65.

Dow Jones Industrial Average ($DJI)

On the economic data front, several numbers came out on Friday. First, the Labor Department reported that its Consumer Price Index rose 0.1% in December. In a separate report, the Fed stated that industrial production rose 0.6% in December. Additionally, the Empire State manufacturing index rose from 4.50 to hit 15.92 in January. Later, the Reuter/University of Michigan Surveys of Consumers showed little change in consumer confidence levels, despite expectations that we would start to see some improvement.

Even though the market did not display much reaction to the early morning data, the mood was set for a strong morning breakdown when the initial move out of the open sharply broke the lower trend channel from the previous session in which the indices had hugged the 15 minute 20 period simple moving averages. This slower momentum move, followed by a sharp break of the channel triggered a type of double top on the 15 minute time frame and the pace of the breakdown created the high probability that the indices would at least fall back to the previous zone of lows. In this case, that meant the zone from January 12th-13th.

S&P 500 ($SPX)

In Friday's column, I wrote about the inverted "V" the index futures had made heading into the day. This created a pivot low from the "V" on that time frame that formed from the 11th-14th, followed by the reverse off highs. This generally leads to a longer trading range, which left us with that bias heading into Friday session. The market pulled back and held within that larger trading range. Not only did the market selloff strongly as it fell into the lower end of that range, however, it did so with better volume than we have seen in over a month of trade. This increase in volume will not always lead to a continuation move on the downside, but it does increase the risk.

There isn't any change in pace to indicate a high probability breakout direction from this range. The lower end of the range is holding as support going into Tuesday morning after the extended holiday weekend. The upper end of the range will continue to act as support. This is a great type of market to also implement Fibonacci retracement levels since the indices hold those zones very well. You can add them by drawing Fibonacci lines from Thursday afternoon highs to Friday's mid-day lows. Most charting platforms offer this feature and will automatically add the retracement levels when you connect those two points.

Nasdaq Composite ($COMPX)

The S&P 500 ($SPX) fell 12.43 points, or 1.08%, and closed at 1,136.03. One of the best performers in the S&P 500 was Sprint Nextel Corp. (S). It rose 3.52%. Another top gainer was Valero Energy Corp. (VLO), which rose 2.74%. SLM Corp. (SLM) was the S&P 500's worst-performer. It fell 6.68%. Micron Technology (MU) was the second-worst performer with a loss of 5.59%. Bank shares were particularly weak following the selloff in JPM. As a whole, the sector ended lower by 2%. Industrials and technology shares also felt heavy selling pressure.

The Nasdaq Composite ($COMPX) fell 28.75 points, or 1.24%, and it closed at 2,287.99 on Friday. Check Point Software Tech. (CHKP) was the best-performer in the Nasdaq-100 with a gain of 0.91%. Baidu Inc. (BIDU) followed with a gain of 0.74%. KLA-Tencor (KLAC) was the biggest loser, down 4.74%. Applied Materials (AMAT) fell 4.32%. Marvell Technology Group (MRVL) was the third worst performer with a loss of 4.02%.

Economic Reports and Earnings Events This Week

2010-01-17T22:36:00.000-08:00

Brought to you by Toni Hansen
http://www.tonihansen.com

NOTICE: The U.S. markets are closed on Monday.

Economic Reports and Events This Week

Domestic:
Eastern Time Zone (GMT -5:00) (New York, Toronto)

Jan 19 9:00 AM Net Long-Term TIC Flows Nov

Jan 20 8:30 AM Building Permits Dec
Jan 20 8:30 AM Core PPI Dec
Jan 20 8:30 AM Housing Starts Dec
Jan 20 8:30 AM PPI Dec
Jan 20 10:30 AM Crude Inventories 1/15

Jan 21 8:30 AM Initial Claims 01/16
Jan 21 8:30 AM Continuing Claims 1/09
Jan 21 10:00 AM Leading Indicators Dec
Jan 21 10:00 AM Philadelphia Fed Jan

Domestic and Foreign:
Eastern Time Zone (GMT -5:00) (New York, Toronto)
Jan 17 18:30 AUD TD Securities Inflation DEC
Jan 17 19:01 GBP Rightmove House Prices JAN

Jan 18 -

Jan 19 00:00 JPY Consumer Confidence
Jan 19 04:30 GBP Consumer Price Index DEC
Jan 19 04:30 GBP Core Consumer Price Index DEC
Jan 19 05:00 EUR German ZEW Survey (Economic Sentiment) JAN ***
Jan 19 05:00 EUR German ZEW Survey (Current Situation) JAN
Jan 19 05:00 EUR Euro-Zone ZEW Survey (Economic Sentiment) JAN
Jan 19 05:00 EUR Euro-Zone Construction Output NOV
Jan 19 08:30 CAD Bank of Canada Interest Rate Decision ***
Jan 19 09:00 USD Net Long-term TIC Flows NOV
Jan 19 09:00 USD Total Net TIC Flows NOV
Jan 19 16:45 NZD Consumer Prices Index Q4 ***
Jan 19 17:00 USD ABC Consumer Confidence JAN 17
Jan 19 19:00 CAD Consumer Price Index DEC ***
Jan 19 19:00 CAD Bank Canada Consumer Price Index Core DEC

Jan 20 02:00 EUR German Producer Prices DEC
Jan 20 04:30 GBP Bank of England Policy Meeting Minutes ***
Jan 20 04:30 GBP Jobless Claims Change DEC ***
Jan 20 04:30 GBP Claimant Count Rate DEC
Jan 20 04:30 GBP ILO Unemployment Rate NOV
Jan 20 04:30 GBP Average Earnings ex bonus NOV
Jan 20 08:30 CAD Manufacturing Shipments NOV
Jan 20 08:30 USD Producer Price Index DEC
Jan 20 08:30 USD Producer Price Index Ex Food & Energy DEC
Jan 20 16:45 NZD Retail Sales NOV
Jan 20 16:45 NZD Retail Sales Ex-Auto NOV
Jan 20 19:30 AUD New Motor Vehicle Sales DEC

Jan 21 00:00 JPY Leading Index NOV
Jan 21 00:00 JPY Coincident Index NOV ***
Jan 21 03:00 CHF Money Supply M3 NOV ***
Jan 21 EUR German Purchasing Manager Index Manufacturing JAN
Jan 21 EUR Euro-Zone Purchasing Manager Index Services JAN
Jan 21 EUR Euro-Zone Purchasing Manager Index Manufacturing JAN
Jan 21 EUR Euro-Zone Purchasing Manager Index Composite JAN
Jan 21 04:00 EUR European Central Bank Publishes Monthly Report JAN
Jan 21 04:30 GBP M4 Money Supply DEC ***
Jan 21 05:00 CHF ZEW Survey (Expectations) JAN
Jan 21 10:00 USD Philadelphia Fed. JAN ***
Jan 21 10:30 CAD Business Outlook Future Sales Q4 ***

Jan 22 04:30 GBP Retail Sales DEC ***
Jan 22 08:30 CAD Retail Sales NOV ***
Jan 22 08:30 CAD Retail Sales Less Autos NOV

Jan 23 ---

*** Highly influential

Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed "medium to high impact".

Key Earnings Announcements This Week:

Monday, January 18, 2010
Before: -
During: -
After: -

Tuesday, January 19, 2010
Before: C, FAST, FHN, FRX, IIVI, MMR, EDU, PH, PETS, AMTD
During: -
After: ADTN, CREE, CSX, FULT, HBHC, IBM, PNFP, SUPX, WIT

Wednesday, January 20, 2010
Before: AIT, ASML, BAC, BK, EAT, COH, COV, HCKB, IGTE, JEF, LAB, MTB, MI, MS, NTRS, PGR (?), STT, USB, WFC
During: -
After: DOX, EBAY, FFIV, KMP, LOGI, NVEC, OHB (?), PLXS, PLCM (?), RJF (?), STX, SWKS, SLM, SBUX, TSS, WGOV, XLNX

Thursday, January 21, 2010
Before: AFMI (?), APH, AMR (?), AUO (?), SCHW (?), CMA, CAL, CVBF (?), FCS, FITB, FNFG, GMT, GS, HOMB, IMN, IIIN, ESI, KEY, NITE, LM, LYTS, MDZ, MDP, VIVO (?), MTG (?), PNC, BPOP (?), PPG, PCP, SMTS, LUV, SBIB, TSM (?), TCB, TDY (?), UNP, UNH, WNS, XRX, ZOLL (?)
During: ASBC (?), ED
After: AMD, AXP, BXS, EPAY (?), BNI, COF, CBST, CYS (?), DGII, EFII, ELX, EZPW, GOOG, HTLD (?), IBKR, IGT, ISRG, JJSF, MATW, MSCC, NTCT, OCLR (?), PBCT, SIVB, SYNA, WDC

Friday, January 22, 2010
Before: APD, ACO, AVX, BBT, EXC, GE, HOG, HBAN, JCI, KMB, MBFI, MCD, PRSP, SLB, STI, WBS
During: -
After: -

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

© 2010 Toni Hansen
All rights reserved

Market Moves Higher Into Intel Earnings

2010-01-15T00:58:00.000-08:00

Market Moves Higher Into Intel Earnings

(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! This has been a busy economic data week for the markets. On Thursday the Commerce Department reported that U.S. retail sales fell 0.3% in December. November sales, however, were upwardly revised from a 1.3% gain to a gain of 1.8%. October sales were also up strongly by 1.2%. The Labor Department also released several reports. In one, they stated that import prices were flat in December. Initial claims for jobless benefits, however, increased 11,000 to 444,000 last week, while the four-week moving average continued to hit new 52-week lows.

In a separate report by RealtyTrac on Thursday morning, it was reported that 1 out of 45 U.S. households, or 2.21%, received a foreclosure filing in 2009. This was a 21% increased over the previous year to hit a record 2.82 million.

Dow Jones Industrial Average ($DJI)

The market did not show a strong reaction to the morning's data. The index futures had hit a double top going into midnight Eastern, which led to a slow pullback lower in premarket trade. The indices found support at 9:00 ET and pulled back higher into the opening bell. The double top was repeated on the intraday time frames at the 10:15 ET correction period. In all three of the major indices this second high was very slightly higher than the first. This created a double top pattern that was also a bull trap. I call it a 2T™. Since it took place into a strong morning correction period, it made it easier to pull back off this high. A small Avalanche™ formed on a 2 minute chart the triggered at approximately 10:40 ET.

The market continued rapidly lower into the 11:00 ET correction period. This took the three indices back into the zone of the opening price level and the "V" low from the highs to lows and back from 15:30 ET Wed. into 10:40 ET Thurs. was followed by an inverse "V" from the open into 11:00 ET. This made it likely that the market would continue to trade within that range throughout a large portion of the session. The action was thin and more choppy than in the earlier sessions this week. They held the 5 and 15 minute 20 period simple moving averages as they slowly trended higher until the final hour of trade. The last reversal off the upper end of that trend held at the 15:00 ET correction period and led to a break in the lower trend channel in the Nasdaq in the last 25 minutes of the regular trading day.

S&P 500 ($SPX)

On Thursday, the Dow Jones Industrial Average ($DJI) rose 35.52 points, or 0.33%. It ended the regular trading session at 10,716.29. Merck & Co. (MRK) was the strongest Dow component. It rose 2.72%. Intel (INTC) followed with a gain of 2.48%. Microsoft (MSFT) rose 2.01%. The telecoms were the worst performers. Verizon Communications (VZ) fell 2.04%, while AT&T (T) fell 1.69%. Wal-Mart Stores (WMT) slipped 1.45%.

Meanwhile, the S&P 500 ($SPX) rose 3.56 points, or 0.31%, and closed at 1,149.24. Textron Inc. (TXT) (+8.94%) was the index's best-performer. it was followed by a 5.55% gain in KeyCorp (KEY) and a 5.55% gain in Marriott International Inc. (MAR). Tyson Foods (TSN) also experienced a strong gain when it gapped higher and held onto the morning's gains to close higher by 5.48%. Sprint Nextel (S) was the biggest loser. It fell 7.75%, followed by a 5.77% loss in Quanta Services (PWR).

Nasdaq Composite ($COMPX)

The Nasdaq Composite ($COMPX) rose 12.06 points, or 0.52%, and it closed at 2,319.96 on Thursday.Baidu Inc. (BIDU) received a huge boost on Wednesday after Google (GOOG) announced that it may be pulling out of China due to security issues from cyber attacks. It continued to push strongly to the upside on Thursday as well and posted a 5.63% gain. Wynn Resort (WYNN), which triggered a swingtrade buy heading into the month, was also one of the session's best performers with a gain of 3.90%. After forming a double top on the daily time frame a week ago, First Solar (FSLR) has come under increasing selling pressure. In Thursday's session the extent the downside push left it in last place out of the Nasdaq-100's index components. It fell 5.51%. Illumina (ILMN), which had been soaring this month, took some time to catch its breath and gave back 3.65% of its gains.

Intel (INTC) is trading higher heading into early Friday morning after it reported better-than-expected earnings on Thursday afternoon. With techs strong heading into Friday's session, Japan's Nikkei average hit a 15-month closing high of 10.982.10. Meanwhile, the U.S. dollar rose against the euro and crude oil futures slipped lower. Heading into Friday morning, watch out for JP Morgan's (JPM) earnings, which are due out early in the day. The consumer price index and industrial production are the other two to watch for on Friday. There is no strong directional bias heading into Friday's session. The range on the 60-minute charts can easily continue due to the inverted "V" highs made shortly after the closing bell in the index futures. Earnings season will pick up full steam during next week's shortened trading week. The markets will be closed next Monday for Martin Luther King Jr. Day.

Market Recovers Tuesday's Losses

2010-01-13T18:41:00.000-08:00

Market Recovers Tuesday's Losses

(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 several weeks of very choppy trade, I came into this week expecting wider and "cleaner" intraday moves. The market has not failed to make good on its promise. Lower-risk intraday setups have been more prevalent and follow-through has been strong, although from day to day the market has swung back and forth from highs one day to lows the next and back again. On Wednesday that swing was on the upside. The session began with the follow-through from the Tuesday afternoon reversal. The market opened with the S&P 500 and Nasdaq futures hitting the 5 minute 200 period simple moving average as resistance. This level held and the market pulled back to close the opening gap and return to the lower end of the upside channel that had been in place since Tuesday's afternoon lows.

Dow Jones Industrial Average ($DJI)

The market held support at the 10:15 ET correction period, although it was another 15 minutes, in which the downside momentum shifted, before the bulls were able to re-establish control. This took place at 10:30 am ET. An initial bounce was followed by a base at the 5 minute 20 period simple moving average zone. Volume dropped as it hugged that level. This created a 5 minute Phoenix™ buy setup that triggered out of the 11:15 ET correction period. The remainder of the morning and early afternoon was spent in a strong uptrend.

The market's late-morning ascent hit a snag just after 12:30 ET. At this point the indices had established three waves of buying. This over-extended the trend since each correction between the wave of upside was comparable in the length of time they took to develop. Longer correction to such trend moves will typically follow. Sometimes this means a larger trend reversal. Other times it means the trend rests for a longer period of time before continuing, or it can mean a shift in the momentum of the trend. On Wednesday the S&P 500 and Dow Jones Industrial Average experienced the second scenario, whereas the Nasdaq experienced the third.

The Federal Beige Book, which came out at 14:00 ET, was a catalyst for the resumption of the day's earlier uptrend. Although economic activity remained low, there were modest improvements over a larger geographic area than at the time of the last release. The afternoon breakout came from a strong technical buy strategy in the S&P 500 and Dow Jones Ind. Ave. in addition to the news boost. In the 45 minutes prior to the Beige Book's release, the indices formed a 2-wave correction off early afternoon highs. This was the most-identifiable in the S&P 500. Notice that volume declined as the base formed. This allowed the strategy to follow-through strongly in the second half of the afternoon, although the entire market did pull back slightly ahead of the close. This was likely profit-taking, as well as the price resistance from Monday's session (as shown on the 15 minute charts).

S&P 500 ($SPX)

On Wednesday, the Dow Jones Industrial Average ($DJI) rose 53.51 points, or 0.50%, to recover all of Tuesday's losses and then some. It ended the regular trading session at 10,680.77. Only 8 of the Dow Jones Ind. Average's 30 index components posted a loss. The winners included the drug providers, which included several upgrades, while the losers included oil-related securities and telecoms. The top performers were Merck (MR) (+3.68%), Alcoa (AA) (+2.96%), Pfizer (PFE) (+2.34%), and Cisco (CSCO) (+1.82%). AT&T (T) (-1.19%) posted the biggest loss, followed by Chevron (CVX) (-0.76%), and Exxon Mobil (XOM) (-0.40%).

Banking stocks overall were up 1%, while the Dow indices that cover airline and hotel stocks also rose strongly (by nearly 3%). The Dow Jones US Tires Index, however, fell approximately 4%. An unexpected, sharp increase in refined inventories helped contribute to the weakness felt by energy shares. Crude oil futures fell once again after reacting to strong price resistance on the daily time frame last week. The price for February delivery fell $1.14 a barrel and settled at $79.65 a barrel. Prices are down about $4 since hitting 15-month highs on Monday.

Nasdaq Composite ($COMPX)

Meanwhile, the S&P 500 ($SPX) rose 9.46 points, or 0.83%, and closed at 1,145.68. Eastman Kodak (EK) was the best-performer in the S&P 500. It rose 12.30%. Windham Worldwide Corp. (WYN) followed with a gain of 8.56%. Goodyear Tire & Rubber (GT) was the worst-performer. It fell 4.33%. After striking strong price resistance at $15 last week, Tesoro (TSO) corrected with a loss of 3.90%.

The Nasdaq Composite ($COMPX) rose 25.59 points, or 1.12%, and it closed at 2,307.90 on Wednesday. The Chinese search engine Baidu Inc. (BIDU) was the Nasdaq-100's strongest stock after Google (GOOG) reported that it may pull out of China due to ongoing cyber attacks. Google (GOOG) has opened sharply lower, but managed to regain some of its market share by the end of the day, ended the session down 0.57%.

REMINDER: Intel (INTC) will be reporting earnings on Thursday afternoon. JP Morgan (JPM) reports on Friday morning. Earnings season with pick up full steam on the week of Jan. 18th. This will also be a shortened trading week. The markets will be closed next Monday for Martin Luther King Jr. Day. Although earnings news will be lighter this week, economic data is heavy. The December retail sales report comes out on Thursday morning at 8:30 am ET. A 0.6% gain is expected, compared to 1.3% in November. The consumer price index and industrial production are the other two to watch for on Friday.

Since the market did not hug the lower end of the pullback from Monday's highs on Wednesday, the odds are favoring continued upside, but the equal move on the daily time frame as compared to the early November rally will remain as strong overhead resistance. We should continue to see better intraday action and stronger intraday swings like we have seen so far this week, as compared to the choppier intraday action of the prior two.

Alcoa Disappoints and Job Openings Decline

2010-01-12T16:48:00.001-08:00

Alcoa Disappoints and Job Openings Decline

(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 displeased with the day's overall news on Tuesday. Alcoa (AA) kicked off earnings season late Monday and failed to meet fourth-quarter expectations with a $277 million loss ($0.28 a share). Sales fell 4% and overall earnings came in at 1 cent a share compared to expectations of 5 cents a share. Meanwhile, in other news, the number of job openings fell in November by 156,000 according to the Labor Department. Openings overall were down 27% year-over-year. To make matters worse, the number of unemployed individuals per job opening hit its highest level on record with a ratio of 6.35 to 1.

Dow Jones Industrial Average ($DJI)

Even though the news was not pretty, the market had already been favoring a weak session well before the opening bell. On Monday morning, the indices had fallen sharply into the open after rounding off at premarket highs and highs made on a strong, evening session on Sunday. Following Monday's close, the market held the lower end of the range on a 15 minute, all-sessions time frame. 2:00 am ET highs were lower than the intraday ones in the S&Ps and a short triggered coming off that early morning pivot that led to a break in the previous day's lows in the index futures. This manifested itself as a 2-wave continuation short on that time frame with the first wave of buying into the afternoon on Monday and the second going into that 2:00 am ET high.

The indices continued lower into the opening bell. At that point the momentum started to shift after the S&Ps hit equal move support as compared to Monday's early morning breakdown. This is the typical target level for a 2-wave continuation and it led to another longer intraday congestion. The base did not last as long as the previous one in terms of the time it took to form, but it was comparable in terms of the number of ticks in the base as compared to the one heading into Tuesday morning. This led to a third selloff to complete the larger trend. This also leaves that trend over-extended on the downside heading into Wednesday morning.

The indices held support going into the 13:00 ET correction period and slowly shifted momentum, reclaiming a large portion of intraday losses into afterhours trade. By forming three comparable waves of selling, the channel from the week's downtrend so far on the all-sessions charts is now likely to break. This may simply mean a longer congestion with more downside if the market pulls back to the lower end of Tuesday's afternoon range and bases out further, or a stronger bounce can allow the market to hold the larger uptrend and continue to push to new highs.

Right now it is easier to follow the shorter-term intraday biases since the 15 minute charts are favoring a longer range into Wednesday. This means that the momentum within that range can shift either way as the range develops. It is this shift that will help provide a clear bias on the larger time frames. Slower upside within the range will favor a break lower and vice versa. Use charts that depict pre and post market data to help view this more clearly as it plays out.

S&P 500 ($SPX)

On Tuesday, the Dow Jones Industrial Average ($DJI) fell 36.73 points, or 0.34%, to end the regular trading session at 10,627.26. Just over half of the Dow's index components posted a loss. Kraft (KFT) led the gainers, up 1.70%. American Express (AXP) followed with a gain of 1.33%. Procter & Gamble (PG) rose 1.15%. Alcoa (AA) was the biggest loser after it failed to live up to earnings expectations. It dropped a sizable 11.06%. Bank of America (BAC) followed at a distant second-place loss of 3.37%. Caterpillar (CAT) gave back a large chunk of Monday's gains and closed lower by 2.95%.

Meanwhile, the S&P 500 ($SPX) fell 10.76 points, or 0.94%, and closed at 1,136.22. QLogic (QLGC) was the best-performer after it was upgraded to outperform. It climbed 9.31%. Supervalu (SVU) came in second with a gain of 5.80%. Hershey Co. (HSY) rose 4.34%. MetroPCS Communications (PCS) was again one of the major losers. It fell 11.68%. AA was the second-worst S&P 500 performer.

The Nasdaq Composite ($COMPX) fell 30.10 points, or 1.30%, and it closed at 2,282.31 on Tuesday. Illumina Inc. (ILMN) was the Nasdaq-100's best-performer after it unveiled its HiSeq 2000 genome sequencing system and preliminary Q4 revenue results that beat estimates. ILMN ended the session higher by 15.82%. Infosys Technologies Ltd. (INFY) was the second-best performer. It rose 5.14%. Despite a few spots of bullishness, however, most of the Nasdaq-100 index components posted a loss. The top lower was Electronic Arts (ERTS), which fell 7.77%. LAM Research (LRCX) followed with a loss of 6.49%. Applied Materials (AMAT) fell 4.51%.

Nasdaq Composite ($COMPX)

Intel (INTC) will be reporting earnings on Thursday afternoon. JP Morgan (JPM) reports on Friday morning. Earnings season with pick up full steam on the week of Jan. 18th. This will also be a shortened trading week. The markets will be closed next Monday for Martin Luther King Jr. Day. Although earnings news will be lighter this week, economic data is heavy. The Federal Reserve's Beige Book is released on Wednesday. The December retail sales report then follows on Thursday morning at 8:30 am ET. A 0.6% gain is expected, compared to 1.3% in November. The consumer price index and industrial production are the other two to watch for on Friday.

New Yearly Highs Hit Once Again

2010-01-11T21:01:00.001-08:00

New Yearly Highs Hit Once Again

(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 index futures were trading higher into Monday's opening bell. They were led by the S&Ps and Dow, while Friday's stronger Nasdaq lagged. One of the strongest performers in the day's session was gold, as well as gold-related stocks. The previous metal ended the session higher by 1.1% at $1,151.40 an ounce. Strong Chinese imports and words from a Federal Reserve official that favored a continuation of low rates put pressure on the dollar and allowed inverse performers to excel. Caterpillar Inc. (CAT), for example, was the Dow's strongest leader. It climbed 6.28% in Monday's session. Crude oil, on the other hand, experienced selling pressure despite the recent increase in energy consumption. Both had shot higher over the past several weeks as temperatures plummeted, but oil hit substantial price resistance from late fall mid-week last week and has struggled to push through that level.

Dow Jones Industrial Average ($DJI)

Although the major indices kicked off the day with gains on Monday thanks to buying throughout Sunday, the trend had already shifted ahead of the opening bell with a break lower into 6:00 am ET. By 9:30 ET the futures for were a 5 minute Avalanche™ short setup by basing along low made shortly after the 6:00 pullback. This short pattern triggered going into the open and led to a sharp downswing in the first 45 minutes of the day. The Nasdaq experienced the sharpest selloff and took back Friday's gains very quickly. It held support at the zone from Thursday's close, however, along with the 15 minute 200 sma, and remained there throughout most of the remainder of the session.

While the Nasdaq fell to lower lows, the S&P 500 and Dow Jones Industrial Average faired better. They held support at the 5 minute 20 sma zone and 15 minute 20 period sma. They then hugged this level before breaking down into 11:00 ET. The Dow was the strongest and did not even return to previous lows, but the S&Ps pushed to a slightly lower low. A third slightly lower low followed in this index out of noon. This set the stage for a Momentum Reversal Buy Strategy™ off the third low going into 13:00 ET.

All three of the major indices held lows into 13:00 ET. The Dow was the strongest, but the S&Ps also trended higher into the end of the day with it regaining the morning's losses into the final hour of trade. This afternoon rally build on itself with increasing momentum. This resulted in a number of strong intraday breakout setups in individual stocks in the second half of the day. Surprisingly, nearly half of the Dow's index components still remained in negative territory.

S&P 500 ($SPX)

On Monday, the Dow Jones Industrial Average ($DJI) rose 25.47 points, or 0.24%, to end the regular trading session at 10,643.66. Following CAT, Alcoa (AA) was the second-best performer in the Dow. It rose 2.53%. Home Depot (HD) was the weakest. It fell 2.83%. Disney (DIS) followed with a loss of 1.63%.

Meanwhile, the S&P 500 ($SPX) fell 0.20 point, or 0.02%, and closed at 1,144.78. Whole Foods (WFMI) was the strongest of the S&P 500 shares. It rose 6.37%, followed by CAT, and a 5.35% gain in Textron Inc. (TXT). Owens Ill. Inc. (OI) was the worst-performer with a loss of 5.34%. Peabody Energy (BTU) fell 4.13%. Quanta Svs. (PWR) fell 4.03%.

The Nasdaq Composite ($COMPX) fell 10.64 points, or 0.46%, and it closed at 2,306.53 on Monday.Liberty Media Corp. (LINTA) (+3.65%) and Schein Henry (HSIC) (+3.30%) were the top two Nasdaq-100 companies in the day's session. Steel Dynamics (STLD) (-3.12%) was the worst-performer.

Nasdaq Composite ($COMPX)

Alcoa (AA) unofficially kicked off earnings season on Monday following the closing bell. The results were not what analysts had been expecting and AA fell 4% afterhours. Intel (INTC) follows on Thursday afternoon, and then JP Morgan (JPM) on Friday morning. Earnings season with then pick up full steam on the week of Jan. 18th. This will also be a shortened trading week. The markets will be closed next Monday for Martin Luther King Jr. Day. Although earnings news will be lighter this week, economic data will be heavy. The international trade balance report is due out Tuesday morning at 8:30 am ET and is expected to show a $31 billion U.S. deficit in November. The Federal Reserve's Beige Book is released on Wednesday. The December retail sales report then follows on Thursday morning at 8:30 am ET. A 0.6% gain is expected, compared to 1.3% in November. The consumer price index and industrial production are the other two to watch for on Friday.

Heading into Monday's session, we were looking for a break in the 60-minute channel this week and stronger intraday swings with better follow-through. The market so far has done just that. The Dow broke the upper end of its 60 minute range into the open and the waves of action intraday on the 5 minute charts created strong, easily identifiable swings off highs and lows without as much of the choppy trade experienced throughout the past week. This should hold true as the week presses on as well.