The market had a really strong day on Friday to finish up the week. The 60-minute buy setup we were watching heading into the day followed through famously. The day began with a nice upside gap after the September employment report was released and showed increase of 110,000 payrolls. This was in line with expectations, but the report was accompanied by an upward revision of August's data, which had originally showed a decline of 4,000 payrolls. This number was tossed aside when the revisions to August's report showed an 89,000 increase of payrolls instead.



Following the larger-than-average gap, the market took a bit of time to catch its breath. The gap had taken the indices into price resistance from several days earlier when the Dow Jones Industrial Average closed Thursday's morning gap. The Nasdaq remained the upside leader, attempting to move up out of 10:00 ET, but quickly pulled back in so that the overall correction from the gap lasted until the 10:45 ET correction zone. At that point the market broke cautiously to new intraday highs and then began a steady climb into noon.



The Nasdaq Composite stalled first just after 11:30 ET, but the S&P 500 and Dow Jones Ind. Ave. continued into the 12:00 ET reversal period before stalling. As on Thursday, the volume in the marketplace began to dry up over noon. The indices fell into a narrow trading range which lasted until about 13:30 ET. The Nasdaq, which had the best performance earlier in the day had a more difficult time on the breakout, whereas the Dow and S&Ps, which were not as extended as the Nasdaq, experienced another steady move higher throughout most of the afternoon. The S&Ps led the move this time around.

The greater degree of overlap from bar to bar on the 5- and 15-minute time frames in the S&Ps and Dow opened the door for a flush in the late afternoon. When the market climbs on the same momentum as the 20-period simple moving average, whether it hugs it exactly or not, you will always have this risk. When the S&P 500 hit the prior daily highs that gradual uptrend move finally broke. The selling hit at the same time as the 15:00 ET correction period. The 5- minute 20 sma served as some initial support, but the market broke lower again into the final correction period of the session at 15:30 ET after congesting along that level on declining volume.



There were few securities which missed the boat on Friday. For the most part, the market left investors rather happy. The Dow rose 91.70 points by the close, but made record highs intraday of 14,124. The S&P 500 gained 14 points, while the Nasdaq rose 46 points. News in the financial sector kept things busy. Washington Mutual, Inc. (WM) and Merrill Lynch & Co. (MER) both made well over 2%. Alcoa Inc. (AA), which kicks off earnings season on Tuesday, gained 3% on Friday. Another top gainer was Research in Motion Ltd. (RIMM). It rose 12.8% after it doubled its bottom line in the second quarter this year. AAPL, BOBJ, and LAMR were also among the leaders.

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.