Good morning! I hope you had an enjoyable holiday weekend! Last week ended slightly higher than it began following Katrina's destruction. The indices had come into the 20 week sma support and reacted most strongly to it on Wednesday afternoon. Friday began with some continued selling after the market had hit 20 day moving average resistance on Thursday. A 15 minute range near Thursday's lows broke down about 45-60 minute into the open on Friday after the day got off to a choppy start. This selling took the NASDAQ into the prior day's lows and it's 5 minute 200 sma support. It hit at 10:30 ET and the market bounced back to the 5 minute 20 sma before lunch.

Despite the strong move into the 5 minute 20 sma, the market went for a third wave of selling on the 5 minute NASDAQ into noon, hitting a slightly lower low intraday to form a 2B reversal pattern off lows on the 5 minute charts. The more gradual pace and lighter volume on this test of lows indicated higher odds for a mid-day reversal and the market pulled up strongly into the early afternoon. I was hoping to get a bit of a Phoenix or Cup with Handle on the 5 minute charts at the 5 minute 20 sma, but the market barely stalled there before breaking higher into the morning highs in the Dow Jones Ind. Ave.

The upside continued until the 14:00 ET reversal period when the pace began to turn over once more. After basing slightly at the 5 minute 20 sma, the support gave way and the market managed to continue lower for the remainder of the day. The entire afternoon had extremely light volume, however, making for much higher risk. The remainder of the day also lacked stronger technical patterns. Despite a breakdown into 15:30 ET, for instance, the market Dow spiked quickly off 15:00 lows before turning back around. Even though the SP500 and NASDAQ didn't flush like this, such action can easily shake out weaker hands only to then head in the direction originally indicated.

I am watching for a retest of the 20 week sma support in the indices over the next two weeks. This would also provide a stronger test of 100 day sma support in the SP500 and bring the NASDAQ into comparable support as well. As such, I think that we'll see more choppy action this week with a slight downside bias. If the market heads higher without first retesting that support, then we are more likely to see a triangle form on the weekly charts to allow for a greater degree of correction.

Updates: Swingtrades: Trailing stop on AMT from the 22nd. WLP from the 30th has support at the 20 day sma. Adding AEIS for an upside breakout on the daily. Position trades: HSP and CHRS support are the lows of the weekly bases..

Economic Reports and Events
Sep 06: ISM Services for Aug. (10:00 am)
Sep 07: Productivity -Rev. for Q2 (8:30 am), Fed's Beige Book (2:00 pm)
Sep 08: Initial Claims 09/03 (8:30 am), Wholesale Inventories for Jul (10:00 am), Consumer Credit for Jul (3:00pm)
Sep 09: Export Prices ex-ag. for Aug. (8:30 am), Import Prices ex-oil for Aug. (8:30 am)
Sep 12: -
Sep 13: Core PPI for Aug. (8:30 am), PPI for Aug. (8:30 am), Trade Balance for Jul (8:30 am), Treasury Budget for Aug. (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
Sep 06: -
Sep 07: ABS (?), HOV (A), NAV (B), COO (A)
Sep 08: BRL (B), NSM (?), SHLD (B)
Sep 09: -
Sep 12: CPB (B), ENER (?), PLL (A)
Sep 13: BBY (?)

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.