Good day! The market continued to remain higher risk on Friday heading into the weekend, but the morning saw a nice trend move lower. To start the day the indices gapped up into the open. The gap came right into moving average resistance on a number of time frames in the NASDAQ Comp., SP500 and Dow Jones, however, making continuation difficult. After a sloppy first 30 minutes of the day the indices were hit with selling. Revised ISM numbers also came out at the same time.

The initial drop was very steep, making a move back to the upside extremely difficult. As the 5 minute 20 sma support hit, the market stalled for a few minutes, but then continued quickly to new intraday lows. When you have a move as steep as this, trading pivots off support levels is high risk because it usually takes some form of rounding off at lows to allow for a reversal. As a result, I was expecting the risk to increase going into the afternoon since a sloppy trading range was most likely to allow for a correction to the morning drop.

First though, we did get some decent continuation action to the downside. The initial one was a 2 minute bear flag going into the 11:00 ET reversal period. This was a bit smaller than prior moves and stalled as the NASDAQ hit support from Wednesday lows and the SP500 came into support at the 5 and 15 minute 200 simple moving averages intraday.

With the onset of the 11:00 ET reversal period, the market put in a bit larger of a correction off lows over noon. Since the NASDAQ had dropped the quickest and furthest into lunch, it was able to bounce the most, while the SP500 and Dow had the most left to give. and hugged support more closely. As the 5 minute 20 sma caught up going into the 12:00 ET reversal period, with volume declining, the market broke lower out of a 5 minute bear flag, making new lows in the SP500 and Dow Jones Ind. Ave. The NASDAQ held prior lows, however, creating a larger 15 minute bear flag into the early afternoon. It didn't rest long enough to lead to a strong continuation though and only made slightly lower lows in the afternoon. A base into the 15 minute 20 sma would have led to a stronger drop but was more difficult given the rest of the market and the fact that it was the end of the trading week.

In the spirit of the higher risk market, swingtrades are having a more difficult time. CVS hit adjusted stops on Friday by breaking the 20 day sma and prior 60 minute lows. XEC and UNT also both stopped out after promising starts. MRK, MYL and CTXS are still of interest. We are likely to see the risk continue this week unfortunately. What I'd like to see is a bear flag into the 20 and 50 day simple moving averages in the indices. So far that pattern is forming well. This would likely lead to further downside in a week or so.

Economic Reports and Events
Apr 04: -
Apr 05: ISM Services for Mar (10:00 am)
Apr 06: -
Apr 07: Initial Claims 04/02 (8:30 am), wholesale Inventories for Feb. (10:00 am), Consumer Credit for Feb. (3:00 pm)
Apr 08: -
Apr 11: -
Apr 12: Trade Balance for Feb. (8:30 am), FOMC Minutes (2:00 pm), Treasury Budget for Mar (2:00 pm)

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
Apr 04: -
Apr 05: RIMM (A)
Apr 06: AA (A), BBBY (A), LI (A), MON (B), SCHN (?)
Apr 07: CAN (?), STZ (A), PIR (?), RAD (?), RPM (B)
Apr 08: -
Apr 11: DNA (A)
Apr 12: ABT (B), AMTD (B), GCI (?), SOSA (07:00 am ET)

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.