The market was all over the place on Friday with a large divergence between a strong Dow and a weak Nasdaq thanks to the effects of quarterly earnings reports from the prior afternoon, as well as premarket. A number of major tech stocks disappointed, leading to greater relative weakness in the tech-heavy Nasdaq Composite ($COMPX) on Friday. Google (GOOG) fell sharply afterhours on Thursday after it failed to meet expectations. On Friday it ended the session down 52.12 points, or 9.8%, and closed at $481.32. Microsoft's (MSFT) earnings also fell short, resulting in a 1.66 point, or 6%, price decline with shares closing at $25.86. Another big-name tech stock that lost ground was Advanced Micro Devices (AMD), which fell 12.3% to close at $4.65.

The Nasdaq Composite ($COMPX) shed 29.52 points, or 1.3%, on Friday, closing at 2,282.78. This meant a weekly gain of 2% with the year-to-date loss coming in at 13.9%. A large chunk of the losses took place into the open with a strong gap lower on the earnings data. The Philadelphia Semiconductor Index ($SOX) lost 0.7% on the session, while the Morgan Stanley High Tech 35 Index (MSH) fell 0.5%. Gilead Sciences (GILD) fell 10.60% on the day. Other top Nasdaq losers included Whole Foods (WFMI) (-5.06%), Expedia (EXPD) (-4.57%), and Amazon (AMZN) (-4.15%).

The Dow Jones Industrial Average ($DJI), on the other hand, gained ground once again on Friday. It climbed another 49.91 points, or 0.4%, and closed at 11,496.57. This marked a weekly gain of 3.6% with a year-to-date loss of 13.3%. 19 of the Dow's 30 index components closed in positive territory. The gains were led by Citigroup (C), which was up 7.7% after reporting a better-than-expected quarterly loss. For the week, C gained 19.5%. Bank of America (BAC) followed with a 3.74% gain on Friday. International Business Machines (IBM) defied the tech trend and closed higher by 2.66%.

The S&P 500 ($SPX) was relatively unchanged on Friday. It gained a fraction of a point to close at 1,260.68. This led to an overall gain on the week of 1.7%, which puts it down 14.1% for the year to date. Telecommunication services were up 1.7%, leading the advancers for the day, followed by energy (+1.1%) and financials (+0.9%). Consumer staples fell 0.8%, while consumer discretionary lost 0.4%. In the energy sector, Schlumberger Corp. (SLB) gained 3.9% following second quarter net income growth of 13%.

Dow Jones Industrial Average ($DJI)


After spiking on Tuesday with the downside exhaustion gap in the indices, the volume in the market dropped off quite a bit on Friday. It came in at 1.7 billion shares on the New York Stock Exchange. Advancers outpaced decliners by 8 to 7, while decliners beat out advancers by 5 to 4 on the Nasdaq. Volume on the Nasdaq came in at just over 1 billion shares traded.

In commodities, crude oil futures again slipped lower on Friday, although the selling did manage to exhaust itself in the short term. Crude for August delivery came in 41 cents less than the prior day to end at $128.88 on the New York Mercantile Exchange. For the week overall crude fell 11.3%. Wholesale gasoline was also down 11% for the week, although the average retail price of gas still tops $4 a gallon. Gold futures on the Nymex lost $12.70 an ounce to close at $958 an ounce, down more than 1%.

S&P 500 ($SPX)


From a technical standpoint the market was very sloppy on Friday. After several days of strong upside the indices were exhausted into daily resistance at the 20 day simple moving averages. The upside pace began to turn on Thursday when the gap higher was followed by a correction into the afternoon before the indices turned higher once again.

The S&P 500 and Dow Jones Ind. Ave. both gapped higher into Friday morning. The gaps were minor, however, and came on the heels of a rally into the closing bell. The gap itself took the S&Ps back into the previous day's highs, which served as price resistance. Meanwhile, the Nasdaq Composite experienced a stronger gap lower. This took that index into the zone of the prior day's lows into the open.

The market sold off immediately out of the opening bell. This downside continued steadily into 10:00 ET. Prior lows served as support, along with the 15-minute 20 sma in the S&Ps and Dow. The market rolled over at this support, leading into a Phoenix buy setup on the S&Ps and Dow and a 2B reversal on the Nasdaq. A Phoenix is a pattern whose named I coined about a decade ago to describe a reversal pattern which takes place immediately following a low. It can take place within more widely know patterns such as a cup-with-handle or inverse head and shoulders pattern, or following a "V" style pivot low such as on Friday. A 2B is a form of double bottom whereby the second low is slightly lower than the first and serves as a form of trap.

Nasdaq Composite ($COMPX)


The market followed through strongly when the morning reversal patterns triggered coming out of the 10:45 ET correction period. The Dow was the first to hit the morning highs within minutes of triggering. This allowed it to form another continuation pattern to break to new intraday highs while the S&Ps and Nasdaq working on making their own ways back to highs. This feat was accomplished as the 11:15 ET correction period rolled around.

The sharp upside pace made it difficult for the market to simply roll over. Instead, the Nasdaq managed to create a shallow Avalanche breakdown setup on a 5 minute time frame, where as the S&Ps and Dow slid lower with a great deal of chop and overlap from one back to the next within the pullback.

The indices began to slow at morning support at 12:30 ET, but the S&Ps and Dow added one more slightly lower low on a 5-minute time frame into 13:00. This is another major correction period intraday and, combined with the price support, it led to another correction off lows into the afternoon. The Nasdaq corrected through time, hugging the support throughout the remainder of the day with narrow and choppy trading for well over 3 hours. Things were not a great deal smoother in the rest of the market, but it did experience some slightly better price swings. The S&Ps and Dow both pulled back into 15:00 ET from about 14:15 ET, but then rallied back into the close. That final rally is what took the S&Ps back into positive territory, albeit only to a minor degree.

This coming week is going to be dominated by earnings data. The price bias heading into Monday favors a correction lower on a daily time frame this coming week which could easily return the market to the lows of this past week. The larger bias, however, favors such support holding and leading to another wave of upside which would break through the 20-day sma resistance. I posted several examples of how this price action can play out on my blog at http://www.tonihansen.com/blog.

So far the Russell 2000 and Nasdaq Composite are playing along the best with the templates displayed there utilizing previous examples of similar lead-up price action. The typical pullback tends to be an upside-down "V" or pivot off resistance, but the S&Ps and Dow have not quite done this and are basing instead. This may indicate that they are not yet ready to begin the corrective phase and may push this currently trend a little higher before they join in.

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.