Good morning! The market had a very slow day for the most part on Friday. After a week of heavy selling, the indices came into strong daily support early on Thursday morning. The rounding off at lows that the market experienced by retesting the support over noon before making higher intraday highs helped to hold up the indices on Friday. Nevertheless, this didn't save them from an initial gap down.

The gap retraced the prior day's rally by about 50%, after which the market simply got stuck. Volume dropped throughout the morning and into the early afternoon as the range on the day narrowed. With a great deal of overlap from bar to bar on the 5 and 15 minute charts, it was a difficult morning for daytrading. Risk remained high as the weekend approached with the indices holding the gap zone going into the 13:30 ET reversal period.  
 

The volume in the market increased slightly after 13:00 ET, but it wasn't until it held the upper end of the range to lead to a breakout into 13:30 ET that we saw much interest for afternoon trading. This momentum breakout brought with it a smaller continuation pattern on the 1 minute charts into 14:00 ET, but as soon as the prior highs and the intraday equal move hit as compared to the morning, the rally stalled. 

In most cases, a late day move like this will see the market holding the lows of the day and often making new highs into the close. This one came a bit earlier in the afternoon, however, and I think that after such strong downside earlier in the week, a lot of the late day action was simply folks covering open positions ahead of the weekend. The strength of the prior downside action helped to keep buyers at bay, but was also enough to keep sellers from being willing to take a stance. The result was that the market simply drifted back down on light volume into the closing bell.

The market can go either way on Monday due to the action last week. Since the drop from highs a few weeks ago was stronger than average into the daily support, the market will most likely correct more gradually on that time frame. This would mean a lot more overlap from day to day, which would create more choppy and less predictable trends on the intraday charts. Instead of assistance from the larger time frames, I think we'll have to rely more on the shorter term changes intraday to give us direction for a few days. If the overall pace begins to favor one end or the other of a range though, we'll have more to go on.

Updates: Swingtrades: VRTX from the 12th hit most trailing stops on Friday. Position trades: HSP and CHRS long have support at the lows of the weekly bases. CHRS stopped out some folks on Tuesday, but is holding the 20 week sma support. I am looking at acquiring NTRS as a position trade buy on upside breakouts from the current range on the weekly chart, but it needs to hold the 20 week sma level to stay on my watch list. HCA as a position trade short from 9/20 hit trailing stops for a swing, but a larger position trade target is in the $43 zone. UFPI is of interest as a swingtrade buy on the daily charts, but is quite thin and will be higher risk. I will also be keeping an eye on PWAV over the next week or two for an upside breakout.

Economic Reports and Events
Sep. 26: Existing Home Sales for Aug. (10:00 am)
Sep. 27: Consumer Confidence for Sep. (10:00 am), New Home Sales for Aug. (10:00 am)
Sep 28: Durable Orders for Aug (8:30 am)
Sep 29: Chain Deflator-Final for Q2 (8:30 am), GDP-Final for Q2 (8:30 am), Initial Claims 09/24 (8:30 am), Help-Wanted Index for Aug (10:00 am)
Sep 30: Personal Income for Aug (8:30 am), Personal Spending for Aug (8:30 am), Mich. Sentiment -Rev for Sep (9:45 am), Chicago PMI for Sep (10:00 am)
Oct 03: Construction Spending for Aug (10:00 am), ISM Index for Sep (10:00 am), Auto Sales for Sep (12:00 am), Truck Sales for Sep (12:00 am)
Oct 04: Factory Orders for Sep (10:00 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
Sep. 26: JBL (A), WAG (?)
Sep. 27: -
Sep 28: KMG (?), RHAT (A), RIMM (A)
Sep 29: FDO (B), PEP (B)
Sep 30: -
Oct 03: CMGI (A), MOS (B)
Oct 04: -

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.