Good morning! After a rather slow week in the market, Friday ended with the formation of an NR7 day, which is simply the narrowest range day of the prior seven. The day was so uneventful that a 15 minute chart of the NQ (the NASDAQ 100 EMini) looks more like a typical 1 minute chart. This made for a rather difficult trading day, making the caution I urged heading into it strongly warranted.

Adding to the difficulty was a great deal of divergence between the major indices, starting with the stronger open in the Dow Jones Ind. Ave. and SP500 and weaker one in the NASDAQ Comp. While the Dow had gapped up into its 15 minute 200 sma resistance, creating potential for a base along highs and upside breakout, the NASDAQ was continuing to hold the lows from the prior day for the first 15 minutes of the session. Eventually the stronger SP500 and Dow won the tug of war, but the NASDAQ did not get very far before running into 5 minute 200 sma resistance where it fell into a range heading into mid-day. The SP500 and Dow peaked a little later as they put in an equal move on the 15 minute charts as compared to their rally the prior day.

As the NASDAQ formed a 15 minute Cup with Handle, the Dow was creating a 5 minute Avalanche by pulling back into and hugging the 5 minute 20 sma support going into noon. The Cup with Handle in the NASDAQ triggered around 11:30 ET when volume was next to nothing, but it was not able to gain enough interest to succeed in an equal move to hit a typical target for this pattern. The Dow's Avalanche quickly gave way, taking the NASDAQ with it. The NASDAQ's 15 minute 20 sma and 5 minute 20 sma support both gave way and the market sold off for the remainder of the day.

A bit of MRK news shortly after 13:00 ET helped take the market back into morning lows, but the Dow, which had been the market leader in the morning, kept on going with a 5 minute Bear Flag triggering out of the 14:00 ET reversal period. This weakness continued at a very choppy pace into the close, with the SP500 and NASDAQ just basing at the 13:15 lows for the remainder of the day.

Heading into Monday, I am more on the bullish side since the selling interest appeared to have waned towards the end of last week. I do not think there are particularly strong buy setups in the market as a whole at this time, but I am finding some decent swing candidates again for longs. The NR7 should help since such a range is commonly followed by stronger intraday trends.

In the SP500 we have potential for a Reverse Head & Shoulders on the 60 minute charts. The downside pace in the NASDAQ is also more gradual than recent upside moves, showing an attempt to change pace. I do fear that a correction to the upside could be rather limited, however, since the support on the daily and weekly charts here in the market is modest at best. There is still a great deal of room to move before the larger 20 week sma support so I will continue to be willing to adjust my shorter term bias should the intraday action begin to turn south once more.

Updates: I am watching HSP for a breakout on the daily and weekly charts, but it can easily take a few weeks to even a few months to develop with the 20 week and 20 month simple moving averages serving as support. QLGC is on my watch list as a longer term short on a break down out of the current weekly low-level base. For swingtrades, INFY broke down on Monday and hit initial support at the 100 day moving average zone. The 50 day sma will serve as resistance. AMT and WWY have been added to my watch list to buy this week on upside breakouts.

Economic Reports and Events
Aug. 22: -
Aug. 23: Existing Home Sales for Jul. (10:00 am)
Aug. 24: Durable Orders for Jul. (8:30 am), New Home sales for Jul. (10:00 am)
Aug. 25: Initial Claims 08/20 (8:30 am), Help-Wanted Index for Jul. (10:00 am)
Aug. 26: Mich. sentiment-Rev. for Aug. (9:45 am)
Aug. 29: -
Aug. 30: Consumer Confidence for Aug. (10:00 am), factory Orders for Jul. (10:00 am), FOMC Minutes (2:00 pm)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stocks' earnings dates before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Aug. 22: -
Aug. 23: WSM (B), WIND (?)
Aug. 24: BHP (?), CWTR (?), DLTR (B), INTU (A), MIK (A), PTR (A), PETM (A), TIVO (A)
Aug. 25: AVNX (4:00 pm ET), CHS (A), CMOS (A), DG (B), LTXX (A), OVTI (A), PDCO (B), PETC (A), SFD (B), TOL (?)
Aug. 26: -
Aug. 29: -
Aug. 30: ADCT (A), SMTC (A)