Good morning! Following the strong upside from last week's early January rally, the market as a whole became a lot more choppy on Monday. Risk in the indices was pretty high throughout the day because the very gradual upside continuation off last week's move increased the odds that intraday corrections would be more steep. They can also begin without really giving a lot of notice. 

The S&P500, Dow Jones Ind. Ave., and NASDAQ Composite all started the day near Friday's closing prices. The most strength came from the Dow Jones and the home builders, which rose steadily throughout most of the session. The 15 minute 20 sma served as support and aided in pushing prices up into the late morning.

It was a tough day for EMini futures and index-following stocks despite the support. There was simply too much overlap in price from bar to bar on the 5 minute charts to create really nice risk to reward setups. It was necessary to keep wider stops if following them in order to not get flushed out.

Despite the greater risk in the indices themselves, a lot of stocks hit 52-week highs on Monday with some very strong intraday moves. In the NASDAQ  the top gainers were RMBS, SNDK, URBN, XMSR, ALKS, and CELG. In the NYSE they were TOL, DHI, CTX, PHM, KBH and LEN. The NYSE had a lot more of the daily breakout patterns, while the NASDAQ had a larger number of strong moves in stocks that had been either selling off or had wider ranges or coming out of pivots off lows.

The 14:00 ET reversal period saw that rapid decline that had been looming behind the curtains throughout the day. A 2 minute Avalanche triggered a short into 14:30 ET. The decline increased until the market came into support from morning price levels around 14:45 ET. There was also a decent volume spike on the smaller intraday time frames to indicate exhaustion on the 2-5 minute charts. 

Initially it appeared that the market would create a 15 minute Avalanche as it hugged support into the last hour of the day. The pace turned over, however, with more rapid upside compared to the downside within the correction off afternoon lows. This led to a move back into the 14:00 ET breakdown price resistance zone right at the close. For me, I found the 15 minute upside breakout and the 14:00 ET reversal the easiest patterns to follow, but even these had a lot of overlap and more choppy trading.

The return to highs into the close again places the bias intraday on the bulls. The risks that we dealt with on Monday remain, however, so I'll be focusing again more on intraday setups in individual stocks as opposed to new swingtrades or a lot of index trading.

Economic Reports and Events
Jan 10: Wholesale Inventories for Nov. (10:00 am)
Jan 11: Crude Inventories 01/06 (10:30 am)
Jan 12: Export Prices ex-ag. for Dec. (8:30 am), Import Prices ex-oil for Dec. (8:30 am), Initial Claims 01/07 (8:30 am), Trade Balance for Nov. (8:30 am), Treasury Budget for Dec. (2:00 pm)
Jan 13: Business Inventories for Nov. (8:30 am), Core PPI for Dec. (8:30 am), PPI for Dec. (8:30 am), Retail Sales for Dec. (8:30 am), Retail Sales ex-auto for Dec. (8:30 am), Mich. Sentiment-Prel. for Jan. (9:50 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 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
Jan 10: DNA (A)
Jan 11: -
Jan 12: MI (?), MTG (B), MOS (?)
Jan 13: -
Jan 16: AAPL (A)
Jan 17: ASO (B), CAL (B), INTC (?), MEL (?), SOV (A), WFC (B)

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.