As we head into the new trading week, a lot of people's attention is being diverted away from the market and towards the northern Gulf coast as Hurricane Katrina sets to make landfall early Monday morning. As I write this the night before, the futures are already down a great deal in anticipation. While the market did indeed look lower going into the weekend, I was not wanting to see it drop for such a reason. I hope that you, your family, and your friends are safely out of harm's way as we begin this long day of waiting for what could potentially be one of the worst natural disasters to hit in U.S. history. While they are saying that winds are slowing down, they are still 160 miles per hour and they are expecting a storm surge of 15-25 feet, which is hardly reassuring.

In typical market declines caused by news, the gap will hold and attempt to fill, with the worst of the reaction occurring in the premarket. Since Katrina is set to hit shortly before the open, however, we could easily see more difficulty intraday as people's attention is diverted away from the market. We will likely see some reactionary trading in sectors related to hurricane destruction and recovery, but I would urge caution in these since the affects are often short-lived. The thinner stocks in particular will often catch a trader's eye only to trap him or her easily when the tide turns.

Friday's session, while still on the slow side, had a couple of very nice moves intraday. The first began with the breakdown into the open out of the range at lows that we saw on Thursday. This triggered right away and the selling was steady for the first half hour of the day. Volume spiked at 10:00 ET, however as the EMini SP500 futures came into their 100 day sma support zone. The wide range bar that accompanied this in the NASDAQ also indicated some intraday exhaustion and the market began to correct off lows.

The NASDAQ had the widest move into lows at 10:00 ET and reacted the strongest to it. While the SP500 and Dow Jones Ind. Ave. both formed bearish triangles on the 5 minute charts into the 20 sma around 11:15 ET, the NASDAQ just hugged the 5 minute 20 sma. Hence, while the SP500 and Dow were following through on a short setup intraday, the NASDAQ was forming a buy setup. When the SP500 and Dow exhausted again intraday with a stronger test of the SP500's daily support and another increase in intraday volume into the 12:00 ET reversal period, all three indices rounded off at lows on the 1-2 minute charts and spiked higher over noon.

The change in pace helped the market hold its lows as it progressed into the afternoon. The NASDAQ and Dow both ended up hugging their 15 minute 20 sma resistance. Like we saw on the NASDAQ 5 minute chart, this created more of a bullish pattern. The light volume during this time also helped out and the market broke higher coming out of 14:00 ET, returning once again to opening levels where the price resistance held. The week then ended on a slow note by holding the range zone for the remainder of the day.

Updates: AMT from Monday corrected a bit Thursday. The 20 day sma is now support.  INFY short from the 15th hit new lows before correcting intraday off $66.61. The market target is still $64-$65, and resistance is the 20 day sma. I am still watching HSP for a position trade buy on a breakout from the weekly and monthly range. WLP is a stock I am watching on the daily charts for an upside breakout for its nice relative strength and narrowing range with decreasing volume.

Economic Reports and Events
Aug. 29: -
Aug. 30: Consumer Confidence for Aug. (10:00 am), Factory Orders for Jul. (10:00 am), FOMC Minutes (2:00 pm)
Aug. 31: Chain Deflator-Prel. for Q2 (8:30 am), GDP-Prel. for Q2 (8:30), Chicago PMI for Aug. (10:00 am)
Sep. 01: Initial Claims 08/27 (8:30 am), Personal Income for Jul. (8:30 am), Personal Spending for Jul. (8:30 am), Construction Spending for Jul. (10:00 am), ISM Index for Aug. (10:00 am), Auto Sales for Aug. (12:00 am ), Truck Sales for Aug. (12:00 am)
Sep. 02: Average Workweek for Aug. (8:30 am), Hourly Earnings for Aug. (8:30 am), Nonfarm Payrolls for Aug. (8:30 am), Unemployment Rate for Aug. (8:30 am)

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. 29: -
Aug. 30: ADCT (A), SMTC (A)
Aug. 31: SNY (B), TIF (B)
Sep. 01: CIEN (B), COCO (B), FNSR (A), HRB (A)
Sep. 02: -
Sep. 05: -

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.