I hope that you had a wonderful weekend! After a tumultuous week of trading, the market ended the week last week on a positive note. On Friday, June 6 the market had taken a rather sharp turn. The Nasdaq Composite ($COMPX) had repeated a daily pattern that the Dow Jones Industrial Average ($DJI) had first formed on May 19 with a nice double top. Of course, it was not too nice if you were a bull since the pattern swiftly led to another week of downside. The indices had completed the pattern's typical follow-through on Thursday, however, and this left the door open for a bit of a recovery into the weekend.

On Friday the Dow gained 165.77 points, or 1.4%, and closed at 12,307 with 28 of its 30 components green on the day. For the week overall, the Dow climbed 102 points, or 0.8%. The S&P 500 ($SPX) rose 20.16 points, or 1.5%, last Friday and closed at 1,360, leaving it right about where it had been a week earlier. The Nasdaq Composite climbed 50.15 points, or 2.1%, on Friday and closed at 2,454. Although this was the strongest of the three on Friday, it had been beaten down throughout the week on heavy tech selling. Keep in mind that the Nasdaq had been holding up better than the overall market over the past month, but this relative strength came with a price: It also meant that it had the greatest room to move on the downside. The result was a loss on the week of 0.8%.

Dow Jones Industrial Average ($DJI)


The economic data on Friday was rather interesting because the news was not terribly promising, and yet, combined with the market's larger daily support, the indices were still able to take it in a positive light. Ahead of the open the consumer price index was released, revealing a rise of 0.6% in May. This was more than the 0.5% anticipated, although the core CPI, which excludes food and energy prices, rose 0.2% as expected. The modest gains in core inflation helped ease concerns that the Fed would soon begin to hike rates, which have become widely anticipated to take place several times by year end.

The indices opened higher following the CPI data. The opening price levels were mid-range within the price action of the previous two days and into the 5-minute 200-period simple moving average resistance in the S&P 500 and Dow Jones Industrial Average. Almost immediately this gap began to close, but volume declined at the same time as the price action, suggesting that there was no panic to the selling. This made it very easy for the buyers to regain control when the University of Michigan/Reuters consumer sentiment survey came out ahead of 10:00 ET.

Once again, the morning data was dismal on the surface because consumer sentiment slipped further in June to a 28-year low of 56.7, but at the same time this eased concerns of inflation for the year to come. One-year inflation expectations dropped from 5.2% in May to 5.1% in June. The market established its strongest move of the session following this news.

S&P 500 ($SPX)


The market rally that followed the consumer sentiment news took the indices into the gap zone from last Wednesday morning. The S&P 500 and Dow Jones Ind. Ave. closed this gap first. The Nasdaq had more room to move before that level hit, which I feel contributed to its ability to put in a stronger showing on Friday than the other two. By 10:30 ET each of the three indices had come into Wednesday's gap zone for price resistance and the move was now very extended on a 15-minute time frame. This allowed the indices to roll over throughout the remainder of the morning and into the early afternoon.

Since the upside in the morning was stronger than average and the support levels that were hitting were on larger intraday and daily time frames, this meant that the market would have a more difficult time correcting quickly in terms of price. The result was a pullback into 10:45 ET followed by congestion along the 5-minute 20 sma as the momentum shifted with a triangle formation along the highs. Within the triangle itself was an Avalanche into 11:30 ET and finally a breakdown into 12:30 ET where the momentum was able to increase somewhat on the smaller time frames. The larger bias held, however, and the indices rolled back over to favor the bulls with the onset of the pivotal 14:00 ET correction period. The indices closed at afternoon highs.

Nasdaq Composite ($COMPX)


The breakdown last week completed a two-wave pullback in both the S&P 500 and Dow Jones Industrial Average coming off the mid-May highs. When trend moves are comparable they tend to come in wave of two or three. This has me expecting more upside this week as a reaction to the support zones which hit on Wednesday and Thursday and held into the weekend. The 20-day simple moving average is resistance if the market chops slowly up off the support, but we could easily see the market push back into the congestion from two weeks ago. This should be a pretty decent market this week for daytraders since we will likely see some nice back and forth action as the indices try to push back up into that zone.

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.