Although the Nasdaq Composite ($COMPX) held up rather well in Monday's session, the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) struggled to recover early losses. Both had gapped lower by a decent amount at the open following weaker-than-expected earnings from Bank of America (BAC). BAC fell 2.5% after reporting that earnings fell 77% for the first quarter. By the close of the day the Dow had still lost 24.34 points, or 0.2%. It ended the session at 12,825.02.

American Intl Group Inc. (AIG) (-3.5%) and BAC were the two largest losers in the Dow, but Caterpillar Inc. (CAT) also posted losses over 2% (-2.29%). General Motors Corp. (GM) was the brightest of the bunch. It gained 5.7%. Microsoft (MSFT) came in second with a gain of 1.4%. In the other indices, the S&P 500 lost 2.16 points, or 0.2%, and closed at 1,388.17, while the Nasdaq Comp. gained 5.07 points, or 0.2%, and closed at 2,404.04. While financials dragged down the Dow and S&Ps, tech stocks helped the Nasdaq stay above water.

Most of the gains established by the market and the recovery from early morning losses took place in the second half of the trading day on Monday. The session began with a correction off last week's highs. The market bounced slightly following the downside gap and the Dow and S&Ps made it back to Friday's lows, while the Nasdaq closed its gap and found resistance at the 5-minute 20-period simple moving average. These price resistance zones hit about 20 minutes into the day and since the momentum was about average the indices held that resistance and were able to again push to new intraday lows.

The morning downside continued into 10:30 ET. The Nasdaq slid down its 5-minute 20 sma throughout the move, creating higher odds that the resistance would break to the upside. The S&Ps and Dow had a bit stronger downside momentum, but the selling stalled at the same time. A double bottom followed and when the 11:00 ET correction period hit the market reversed and began to move higher.

Most of the action on Monday was rather choppy in the indices as a whole. Although the market moved higher throughout the remainder of the morning and most of the afternoon, there was a lot of overlap in prices from one bar to the next on both a 5- and 15-minute time frame. The Nasdaq broke to new intraday highs very early on in the afternoon. When the S&Ps and Dow came into morning highs, however, and the Nasdaq hit the zone of Friday's highs, the bulls retreated. The market pulled back quickly off the afternoon highs, but was able to round off again at morning support between 14:00-14:30 ET and make their way to new highs on the day once more before the bell.

Although the index futures are down again afterhours, there is still some room for upside on Tuesday. The Nasdaq already began a third wave higher on the 60-minute time frame, so it has room to complete that move, but then I expect things to turn over into the afternoon and head back to the downside. Earnings are a major influence at present when it comes to where the markets are opening each morning, so I would suggest not relying as heavily upon postmarket analysis in the evenings. Instead, come in ahead of the open each day to get a feel for where things stand as a result of the earnings and economic data that comes out each morning.

Dow Jones Industrial Average ($DJI)


S&P 500 ($SPX)


Nasdaq Composite ($COMPX)


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.