Good day! I hope you had a great weekend! The markets were very split on Friday throughout the trading day with the NASDAQ much weaker than the SP500 and Dow Jones Ind. Ave. The day began on a pretty nice gap higher following premarket jobs data. The NASDAQ fell very quickly out of the open though, while the SP500 and Dow pulled in only very slightly. The NASDAQ drop came all the way back to Thursday afternoon highs which served as strong price support at the same time the 9:45 ET reversal period hit. This combo of price and reversal period led to a nice bounce into 10:30 ET, taking the NASDAQ into price resistance from the prior day's highs while the SP500 and Dow both made new highs for 2005.

Following the strong move into resistance the market pulled back a bit more gradually than the rally, but still strong enough that the market would need to fall into a range before it would be able to break out again. This meant that things would slow down over noon. This is when we really saw the markets diverge as the NASDAQ formed a 15 minute Avalanche by basing along lows while the SP500 and Dow Jones began to base closer to highs going into the 12:00 ET reversal period. In the end, while the NASDAQ broke down slightly, it was the other two indices that led the afternoon direction.

After breaking higher over lunch, the market pivoted at the 13:00 ET reversal period as the SP500 came into morning highs and resistance. Volume dropped off as the market pulled back, forming a Bull Flag in the SPs and the Dow as they came into their 5 minute 20 sma support with the 13:30 ET reversal period, creating a nice buy setup going into the last two hours of the day. This flag ran right into the 14:00 ET reversal period where the NASDAQ came into resistance again from morning levels and the market rolled over. This time though, the pace on the pullback started more quickly and when the 5 minute 20 sma support hit, the market was not able to pull off the support to really let this Bull Flag get going. As a result, I bailed on it just above break even ahead of the Avalanche triggering into the last half hour of the day for one last 5 minute setup.

The weekly chart of the NASDAQ is currently still forming that larger Avalanche pattern, although the SP500 and Dow have now broken out on their daily charts. It will likely take them coming into resistance before the NASDAQ short pattern can trigger. Currently our CVD, AFFX, and ANF all have trailing stops in place and some forms of more aggressive trailing stops have hit. PRU, WLP, CTX, ROV and JJZ are stocks to watch for moves higher this week. Note: WLP was given as a swingtrade Friday morning in the TFMS Live Trading Room, but still has a good deal of potential.

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