Good morning! I hope you had a wonderful Thanksgiving holiday! Last week was a pretty slow one for the market as many participants took time off for friends, families or just plain relaxation. Despite the lack of excitement, however, the market continued follow through on our expectations and inched higher. Tuesday afternoon and most of Wednesday were particularly strong as a late day breakout into 14:00 on Tuesday coming out of the FOMC Minutes continued, although at a slower pace, into Wednesday.

The slowdown in the upside pace as compared to the prior afternoon did have a bit of a drawback on Wednesday: It allowed for the market to break that uptrend rather quickly once it made up its mind to try to correct. This led to rapid pullback for the last hour and a half on Wednesday, taking back most of the NASDAQ gains. The SP500 and Dow Jones Ind. Ave. held up a bit better. Even though they also fell sharply off highs, they had put in larger gains throughout the rest of the day and only gave back about one quarter to one third of them with the late day reversal.

Friday, being the day after Thanksgiving, was understandably slow. Many folks were probably still sleeping off their turkey dinners (or pasta if you happened to be at my house. =) The morning began with a slight gap higher and it initially looked like that upside would continue. The market had fallen into a range along the 5 minute 20 sma support, just under the NASDAQ's 15 minute 20 sma. This began the formation of a cup with handle on the 5 and 15 minute charts, but the handle was unable to break higher and instead the 5 minute 20 sma gave way and the gap quickly filled.

The market found support at Wednesday's afternoon lows, pivoting around 10:45 ET. The pace suggested a possible descending triangle, but once again the pattern failed to form on the 15 minute charts. Instead the market continued to correct off the mid-morning lows and climbed gradually into the close. The SP500 was able to make it back to morning highs, while the NASDAQ, which had underperformed on Wednesday, was able to break them. This time around the Dow was the relative strength loser.

Even though the market is once again rather extended on the daily charts, we do have a clear cut breakout on the monthly charts. Back in October we were watching the correction off support to help guide us. Had the market continued to hug the 20 month simple moving average at lows, then a breakdown was more likely. By picking up off the support, however, our second scenario is playing out and it looks like the market is going to try to have another strong year.

I don't particularly care for this type of breakout, where we had some slightly higher highs within the congestive period. The first was at the end of last year and beginning of this year and then again over summer in the case of the SP500. The risk is that a higher high like that can create a type of bull trap. The pro in this case is that it's still the first breakout on the monthly charts since the 2002 lows where the congestion has lasted 1.5-2 times the rally into early 2004. The market doesn't really have a lot of resistance until 2000 highs in the SP500 and Dow Jones Ind. Ave., which is pretty amazing when you look back at that decline. Of course, I still expect corrections on the daily and weekly charts. We are due for one pretty soon. On the larger time frames, however, I'm not finding a of weakness developing when I've been scanning for position trades lately.

Economic Reports and Events
Nov. 28: Existing Home Sales for Oct. (10:00)
Nov. 29: Durable Orders for Oct. (8:30 am), Consumer Confidence for Nov. (10:00 am), New Home Sales for Oct. (10:00 am)
Nov. 30: Chain Deflator-Prel. for Q3 (8:30 am), GDP-Prel. for Q3 (8:30 am), Chicago PMI for Nov. (10:00 am), Crude Inventories for 11/25 (10:30 am), Fed's Beige Book (2:00 pm)
Dec. 1: Auto and Truck Sales for Nov. (12:00), Initial Claims for 11/26 (8:30 am), Personal Income and Personal Spending for Oct. (8:30 am), Construction Spending for Oct. (10:00 am), ISM Index for Nov. (10:00 am)
Dec. 2: Average Workweek, Hourly Earnings, Nonfarm Payroll, and Unemployment Rate for Nov. (8:30 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
Nov. 28: -
Nov. 29: CHS (A), GME (B), SMTC (A), SCMR (B), TIVO (A)
Nov. 30: TIF (B)
Dec. 1: DLM (?), FNSR (A), SYNC (acquired by NOK) (A), NOVL (A), OTVI (A),
Dec. 2: -

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.