Good day! The last day of the trading week last week brought with it a very nice trend day... to the downside. Initially the action didn't quite start out that way though. The semiconductors helped to bring an upside open with a slight gap higher to trigger the 15 minute Cup with Handle we were seeing heading into Thursday's close. The gap closed quickly and the market again moved higher until it hit strong resistance from the prior two days' highs and the 15 minute 200 sma.

Despite the rather rapid pace of the market coming out of its opening rally, when the resistance hit on the larger intraday time frames it held them very well. The correction began slowly at first, but after a few minutes it picked up steam, yielding to selling which was just as rapid as the prior rally. As a result, the prior lows served as support, making for two options: a triangle if the market bounced, or an Avalanche if it didn't. As you can see, the market did not let go of its support from morning lows. Instead it based steadily along those lows as volume declined into the 10:45 ET reversal period. This created an Avalanche with a descending triangle on the 5 minute charts, which gave way to a second strong wave of selling before noon.

As with most morning trend moves, the market took a break over lunch. The downside pace of the morning made a rapid rally highly unlikely and the 15 minute 20 sma overhead would serve as strong resistance. Volume dropped off significantly mid-day, indicating a lack of willing and eager buyers at the support level, thus creating even higher odds for the downtrend to continue into the afternoon. It did just that as the SP500 and Dow Jones Ind. Ave. hit their 15 minute 20 sma resistance, giving in to a another strong drop into the early afternoon.

Since the NASDAQ became the most exhausted in the morning selloff, the SP500 and Dow had the most room to move into the afternoon. With two waves of selling in the morning though, it also meant higher odds for two on the 5 minute charts in the afternoon as well. So, after hitting support into the 14:00 ET reversal period, it seemed likely we would see another Bear Flag on the 5 minute charts to continue the move. In this case the flag was a rather steep one, pulling more quickly into the 5 minute 20 sma, but that resistance held very well and a second wave of selling to complete the set brought the market into the 15:00 ET reversal period where it held lows for the remainder of the day.

ANF, WLP and PRU are continuing to hold support, although ANF is certainly doing the better job of it, while OSTK, GOOG and CECO all formed nice intraday short setups on the 60 minute charts to hit new lows on the week. These are again at support intraday as they finished out the week. I do not have any new swingtrades I am looking at for the moment, but the indices at a whole still look like they want to head lower on the weekly charts. I would like to see another wave of buying on the 60 minute charts before we get a breakout though to help turn the pace over for a better drop for shorting opportunities. Nevertheless, I would not be aggressive on the long side since the vast majority of monthly charts are looking extremely exhausted. Even the much-touted energy stocks of late are starting to look weary. Of course, whenever the local news folks finally learn of a hot sector and begin to talk about it every evening, it's a pretty good sign to start looking for the exit.

I will be heading out tomorrow for my spring holiday, so while I'll be doing the column again for next Monday in between road trips and have left some classes to be posted in my absence, I won't be back full time until 27th. We have two of our foster kids from Iowa down here for their spring break and will be doing the customary, middle of the season, only crazy people and the extremely young or dedicated will attempt it, trip to Disney World. (I fall squarely into the first category.) So wish me luck and sanity and I'll see you again very soon!

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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.