The market attempted a correction off Thursday's support in Friday's session. It began with a gap higher into the open and was followed by a pullback into 10:00 am ET before breaking to new intraday highs following the University of Michigan's preliminary consumer sentiment survey for January, which climbed from 75.5 in December to 80.5.

The morning rally continued into the mid-day congestion from Thursday, which hit at the same time as the Nasdaq Composite's ($COMPX) 5-minute 200-period simple moving average and the 10:15 am ET correction period. Although the momentum was on the strong side with the gap and then the continuation, it turned over once the resistance hit, falling gradually to begin with, but with increased intensity as the morning wore on.



The market reacted very little to each of the initial support levels on the 5-minute time frame as it slid lower. The first support was the congestion into 10:00 am ET. This was approximately the 5-minute 20 sma as well. Prices stalled there for only a couple of minutes before breaking lower and closing the morning gap. This level also had very little impact upon prices. The Nasdaq Composite did bounce for about 15 minutes at that point, but there was no volume increase to show exhaustion even though this gap closure corresponded to the 11:15 am ET correction zone. The Dow and S&Ps didn't bounce at all, but chopped sideways during that same period of time before breaking strongly lower at 11:30 am ET.



This third continuation move on the 2-5 minute time frames finally brought with it the volume necessary for a larger correction on a 15-minute time frame. This volume increase can be seen most easily on the 15-minute charts. The increased momentum on this third move also helped flush out the market. The pivot off the lows following this flush began within minutes of the 12:00 ET correction period. The Nasdaq popped sharply to begin with, making its way into the 5-minute 20 sma. The S&Ps and Dow began more gradually, forming 2-minute Phoenix patterns before breaking higher once again into 12:30 ET. The Nasdaq also pushed through its 5-minute 20 sma at this time.

The previous day's lows in the S&Ps and the previous day's close in the Dow made up the larger time frame resistance zone which stalled the market's afternoon reversal attempt. The 15-minute 20-period simple moving averages also hit in this same time period. Throughout the morning the market had been on the choppy side, even though the trend lower was steady on the 15-minute time frame. When the market corrected off the mid-day lows, however, this "chop" became even more pronounced.



The market made its way lower once again out of the 13:00 pm ET correction period. An initial drop was followed by a smaller congestion zone into nearly 14:30 ET before a second wave of afternoon selling took place on the 5-minute time frame. These moves were very short-lived and only the Dow managed to touch its earlier intraday lows before pulling back up into the larger range at 15:00 ET. The rest of the session was spent within this range between the day's lows as support and the 15-minute 20 sma as resistance.

The week ended with a loss of 59.91 points (-0.5%) in the Dow Jones Industrial Average ($DJI) on Friday. The Dow closed at 12,099.3 for a weekly loss of 507 points, or 4%. The S&P 500 ($SPX) fell 8.06 points on Friday (-0.6%). It ended the session at 1,325.19 for a loss on the week of 5.4%. The Nasdaq Composite ($COMPX) fell 6.88 points (-0.3%). It closed at 2,340.02 for a weekly loss of 4.1%.

Verizon Communications (VZ) was the largest loser in the Dow. It fell 4.4% on Friday, while American International Group (AIG) came in a close second with a loss of 4.1%. 18 of the Dow's 30 components posted losses. General Electric Co. (GE) (+3.3%), and International Business Machines (IBM) (+2.3%) were the top gainers. Both companies had been able to beat earnings expectations.

The selling in the past two days has brought the indices into that equal move territory on the weekly time frame that we have been following. In other words, the market managed to mimic the decline from October into November in terms of price. The difference is that the recent selling took place on stronger momentum than in that previous weekly decline, which has pushed prices a bit lower than an exact equal move. It is also going to make it more difficult for the market to pivot quickly off lows and instead make it more likely that the market will round off with slightly lower lows before pulling higher or else will hold this past week's lows and instead chop higher. The first scenario would allow for a stronger bounce following the lows, whereas the second would tend to be weaker with more overlap from day to day.

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.