After consolidating throughout Thursday's session, the market broke higher afterhours. This led to a decent upside gap into Friday morning, but after a huge rally on the 60 minute time frame, the bulls were exhausted. The highs from the gap held and selling began immediately out of the opening bell. The downside was slow to begin with, but after 10:15 ET it began to accelerate with the indices quickly closing the morning gap.

The selling continued into the 11:00 am correction period. The 15 minute 200 simple moving average and price support from Thursday's congestion held as the market took a break from the downside push. Over noon the markets consolidated, forming a narrow trading range along the support on declining volume. Without any real attempt to recover the morning's losses, the indices were poised for yet another breakdown into the early afternoon.



Friday's morning decline lasted approximately an hour and a half. After the mid-day trading range broke lower, the early afternoon downside mimicked the earlier descent. The indices sold off for another 90 minutes before coming into Thursday's lows and strong price support into the 14:00 ET correction zone. Equal, or measured, moves in the market on breakouts and breakdowns are pretty typical phenomena in the marketplace. They can occur both in time as well as price. Since 14:00 ET is one of the strongest reversal or correction periods of the day, the combination of the the equal move, price support, and correction period allowed the selling to stall once again into the final two hours of the day.



Once again, the market had a difficult time rallying off the intraday support in Friday afternoon. Although they attempted to move higher, the indices ran into resistance at the 15 minute 20 sma and fell back to the lows of the late day range. The day ended with all three indices within just a few ticks of the day's lows. The Dow Jones Industrial Average ($DJI) had fallen 171.44 points, or -1.4%, and closed at 12, 207.2. The S&P 500 ($SPX) fell 21.46 points, or -1.6%, and closed at 1,330.61. The Nasdaq Composite ($COMPX) closed lower by 34.72 points, or 1.5%. It ended the session at 2,326.20.

Top gainers on Friday included Perkinelmer Inc. (PKI) (+17.53%), Technitrol Inc. (TNL) (+17.41%), Peabody Energy Corp. (BTU) (+7.93%), Cummins Inc. (CMI) (+6.10%), China Fin Online (JRJC) (+20.08%), Scansource Inc. (SCSC) (+19.18%), Melco Pbl Entertainment (MPEL) (+12.85%), Sunpower Corp. (SPWR) (+5.9%), and Amgen Inc. (AMGN) (+4.38%). On the other end of the spectrum were the losers. Among them were Triumph Group Inc. (TGI) (-12.16%), Hartford Finl Group Inc. (HIG) (-5.96%), Ace Ltd. (ACE) (-4.95%), Merrill Lynch & Co. (MER) (-4.33%), Synaptics Inc. (SYNA) (-23.42%), Deckers Outdoor Corp. (DECK) (-8.34%), Cymer Inc. (CYMI) (-5.75%), Sears Holdings Corp. (SHLD) (-5.73%), Gilead Sciences Inc. (GILD), and Cephalon Inc. (CEPH) (-4.73%).



A lot of the disappointment on Friday was attributed to reduced expectations out of next week's Fed meeting. Many had been hoping for a 50 basis point cut, but the consensus at this point is for a 25 basis point cut or even that they may not cut rates again at all. I was a bit surprised by both the former and latter, assuming that many, like I, had been looking for the 25 basis point cut. I guess we shall have to see! I don't know that this necessarily was the reason for Friday's move though. The markets had really pushed to extend themselves on Wednesday and I think that move was just a bit too much to be able to sustain a second wave of buying without an intraday correction lasting longer than a day. I still am looking at the potential for more upside into this coming week, but in order for that to occur, the market needs to hold onto a good chunk of Wednesday's gains or else it becomes more probable that it falls into a longer trading range on the daily time frame.

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.