Good morning! There hasn't been a lot of change in the market over the past several weeks. We're well into the holiday season and the market itself seems to have taken a bit of a hiatus. After hitting highs in late November, the indices have fallen into a trading range. Yes, we've seen some slightly higher highs in the NASDAQ earlier this month and then in the S&P500 this week, but there was no significant breakout from the November resistance zone. The Dow Jones Ind. Ave. tried its prior daily highs on Thursday, only to fall back again into the weekend. Intraday all three of the leaders have just been moving back and forth from the highs to lows of this range without being able to make up their minds for a breakout direction.

After hitting its highs zone for the third time on Tuesday, the NASDAQ has seen the most weakness lately. Both the S&P500 and Dow gapped up on Friday, but the NASDAQ opened near its prior day's close. The Dow saw the best efforts from the bulls to try to support the market throughout the morning. It managed to break higher twice on the 5 minute charts going into the 11:00 ET reversal period. The NASDAQ did manage to spike at the same time as the last pop in the Dow, but the attempt was very short-lived. After hitting morning highs, it sank back into the day's lows. The Dow also broke down into support from its opening lows coming off the late morning run. The S&P500 was the only one of the three to break them. It slumped into the prior day's close, filling the morning gap.

All three indices found resistance at the 5 minute 20 sma going into noon. The Dow and S&P500 reacted the most to the morning support, pulling rather quickly into the 5 minute 20 sma. Hence, both fell into triangle formations on the 5 minute charts to allow for the bearish pace to take over again going into the 13:00 ET reversal period. The NASDAQ had formed a more gradual pullback, but found the morning lows difficult to rupture.

It took the indices one more correction off the lows intraday into the 5 minute 200 sma and 15 minute 20 sma intraday before the selling was able to resume more rapidly. This took place right out of the strong 14:00 ET reversal period and brought the market back into the support from the prior day's lows before the end of the day. Volume spiked into that support zone at the same time as the 15:00 ET reversal period hit. These reversal zones held extremely well throughout the afternoon and the 15:30 ET one was no exception. It came as the indices were pulling up off the larger intraday support into the 5 minute 20 sma and held the market near its lows into the closing bell.

My bias heading into the new week is on the bearish side. I think the correction we've been seeing this month wants to continue and that the rounded highs in the NASDAQ and S&P500 can help with that. The NASDAQ is even forming a small daily Head and Shoulders pattern for a reversal pattern. At this point I am not looking for a steep decline overall since the pace has not changed that much in favor of the bear yet, but want to be more cautious on new longs since rounded highs can more often lead to that change in pace that can favor a stronger decline than if the market had just pivoted at one high and pulled back. Due to the holidays, I anticipated things to slow down throughout the week and will be favoring daytrades over swings.

Updates from Monday remain unchanged: NCI and PWAV from last Wednesday's column are correcting a bit on the daily charts but remain viable on the larger time frames. RAVN has also broken higher, but remains a lightly traded stock. NTRS, which I have from mid-October as a position trade long is pulling in a bit after making new highs last week. The 20 week sma and 100 day sma are support. HSP, a position trade from early September, is currently basing again and also has support at its 20 week sma zone.

Economic Reports and Events
Dec 19: -
Dec 20: Building Permits for Nov. (8:30 am), Core PPI for Nov. (8:30 am), PPI for Nov. (8:30 am)
Dec 21: Chain deflator-Final for Q3 (8:30 am), GDP-Final for Q3 (8:30 am), Crude Inventories 12/16 (10:30 am)
Dec 22: Initial Claims 12/17 (8:30 am), Personal Income for Nov. (8:30 am), Personal Spending for Nov. (8:30 am), Leading Indicators for Nov. (10:00 am)
Dec 23: Durable Orders for Nov. (8:30 am), Mich. Sentiment-Rev. for Dec (9:45 am), New Home Sales for Nov. (10:00 am)
Dec 26: -
Dec 27: -

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 stock's earnings date 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
Dec 19: -
Dec 20: MWD (B), NKE (A), PALM (A)
Dec 21: COMS (A), ATYT (?), BBBY (?), BMET (B), KMX (B), COGN (A), CMC (B), FDO (B), FDX (?), FINL (?), JOYG (B), PAYX (A), RHAT (A), RIMM (?), TIBX (A)
Dec 22: CTAS (B), CAG (B), GIS (?), GPN (B), SLR (?)
Dec 23: -
Dec 26: -
Dec 27: -

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.