Good day! The market quite a remarkable Monday's worth of trading. We continued to see a great deal of divergence, but this time the NASDAQ was the market leader while the SP500 and Dow Jones Ind. Ave. lagged behind. A technical reason for this was that the SP500 and Dow became more extended on Friday with their afternoon breakouts while the NASDAQ remained in a narrow trading range for the remainder of the day, creating a larger 30 minute trading range with declining volume right into the 30 minute 20 sma support, creating a Cup with Handle on that time frame.

The breakout in the NASDAQ took place pretty early on in the day. Resistance hit quickly as the Dow came into the prior day's highs, but while this killed the Dow and SP's early morning rally for the most part, the NASDAQ kept rallying like crazy, slowing only as the NASDAQ came into it's 50 and 100 day sma resistance. At this point the SP500 and Dow pulled back a good deal into the 11:00 ET reversal period while the NASDAQ kept creeping higher. The 11:00 ET reversal period was enough to kick off another wave of buying in the weaker SP and Dow, but the NASDAQ was not able to mount another strong intraday move since the early morning rally had brought in a lot of exhaustion. The final straw was the equal move resistance on the 15 and 30 minute charts that hit early on in the afternoon.

The SP and Dow were the first to start to turn over, but the NASDAQ followed with a small 5 minute Avalanche coming out of a Head & Shoulders pattern as the index pulled into its 5 minute 20 sma and then began to base, hugging that support level as volume dropped off. This showed that the slight buying coming off the support didn't have a lot of participation. People were much more leery to be bullish intraday at that point. This short pattern triggered just after 13:00 ET and was followed by a 5 minute Bear Flag out of the 14:00 ET reversal period as the indices pulled back into their 5 minute 20 sma resistance.

This 14:00 ET drop created the 3rd drop in the new afternoon downtrend. As a result, the market needed to take a bit longer of a rest before it could put in another move. It did this by puling back to well within the range of the prior breakdown. It hit the resistance at the 15 minute 20 sma at the same time and this corresponded to the 15:30 ET reversal period. The Dow had the best 5 minute short pattern coming off this resistance and it had the steepest drop into the close, pulling all the way back to morning lows.

Going into Tuesday the NASDAQ is really testing the daily and weekly resistance strongly. The SP500 and Dow are getting a bit extended as well, but at the same time we are not seeing stronger reversal patterns intraday. The correction in the NASDAQ was not that severe into the afternoon Monday and the 60 minute certainly still has more room to move higher although the index is still forming a weekly Avalanche pattern. Nevertheless, most of the swingtrade setups I have been finding recently are still longs. From yesterday's list I am going to remove ROV. CVD, AFFX, and ANF have trailing stop initiated.

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.