Good day! As the market kicks off the new week, the indices continue to remain higher risk. The day began with a continuation to Friday's selling as the indices pulled lower on a 5-15 minute Bear Flag. They found support only as an equal move was established on the 15 minute charts as compared to the prior 15 minute descent. This came with the 10:15 ET reversal period hitting at the same time, with a bit of an increase in volume.

The selling had a difficult time continuing due to the strong daily support that we've been seeing over the last week or so. I still think we're looking at a larger Bear Flag as most likely, but it's going to take a bit of time still to develop and let the daily moving average resistance levels catch up before we get any signs of confirmation. I would also have liked the Dow Jones Ind. Ave. to have held up a bit better over the last two days to help by forming a Bear Flag as well.

Over noon the market chopped around a lot. Market resistance hit at morning highs when the market bounced off lows. It then pulled in a bit more gradually, triggering a 5 minute Avalanche as it fell into the 5 minute 20 sma, based, and then broke lower, trying to pull back to lows but hitting support a bit shy of the lows hit earlier in the day.

As the market rounded off at lows, it popped rather quickly, pulling rapidly to morning highs before stalling a bit as the NASDAQ hit its 5 minute 200 sma resistance. This created a 5 minute Bull Flag leading to another strong upside move that brought the SP500 and Dow Jones Ind. Ave. into their own 5 minute 200 simple moving averages. This was a very significant resistance level and the Dow held it well as the market rounded off again, this time at highs, before closing slightly off them and just under the 5 minute 20 sma.

Risk is looking to remain higher as the week continues. Health care stocks are still looking pretty good with MRK and MYL still holding up well. I expect the action to remain choppier on Tuesday and so forth because the daily charts continue to hold their range. This makes trending action more difficult since support and resistance levels abound. Continue to be more careful this week.

Economic Reports and Events
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)

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.