Good morning! The gradual upside heading into Wednesday morning was followed by that decline we were looking out for, which continued into mid-afternoon. The selling began right away with the S&P 500 and Dow Jones Industrial Average leading the fray. The 15 minute and 5 minute 20 period simple moving averages (smas) serving as resistance. Going into the 10:15 ET reversal period the market put in a slight correction, forming a bear flag into the 5 minute 20 sma before continuing nearly into 11:00 ET.
The indices popped suddenly into 11:00 ET, changing the pace going into mid-day. This led to only a slightly lower low on the next downside attempt in the S&Ps and Dow and a slightly higher low in the Nasdaq as it came into its 10:15 pivot.
Oil services (-2.2%), energy stocks (-1.5%), computer-software stocks (-1.1%), biotechs (-1.0%), and internet stocks (-0.7%) was the primary market losers on the day. After falling into a trading range over noon, the bias within the range was favoring another breakdown due to more gradual upside on light volume into 13:45 ET. These sectors led to an increase in selling in the Nasdaq as well as the S&P 500 once the triangle range broke.
Unlike the S&P 500 and Nasdaq Composite, the Dow Jones Ind. Ave. resumed its role as the best relative strength leader and did not participate in the afternoon selling except to retest its prior 5 minute low. Strength in the airlines helped out as BA, CAL, JBLU, and LUV all posted gains for the session. Other Dow standouts were MCD, WMT, OSG, MMM, CAT, AMR, and CAL.
The afternoon breakdown slowed as it approached Tuesday's lows in the S&P 500 and Nasdaq Comp. The Nasdaq also hit equal move support on the 5 and 15 minute charts as compared to the morning selloff, while the stronger Dow continued to hold its 15 minute 200 sma support level. The indices rounded off at that point on the 1 minute charts, pivoting into the 14:30 ET reversal period and moving back into 5 minute 20 sma resistance. At that point the market became choppy, forming a sketchy 5 minute cup with handle that broke to the upside going into the last reversal period of the day at 15:30 ET.
The rally was strong enough that the Dow nearly regained highs and the S&Ps and Nasdaq ran back into the highs of their mid-day ranges before stalling into the close. The end result was a 16.17 point loss in the Dow Jones Ind. Ave., a 5.87 decline in the Nasdaq Comp., and a drop of 5.36 points in the S&P 500 on the day.
For the remainder of the week a lot of the focus will be on the upcoming jobs data and speculation on how those results will affect the Fed's decision regarding the strength of the economy and whether or not to continue this long strong of rate hikes. From a technical standpoint things are still looking sticky. On a 15 minute time frame the market looks to head higher into the morning, but the highs of the range loom overhead and the market has been having a difficult time putting together two trend day moves in a row, so while I am leaning a bit more towards the bulls intraday, I'm willing to bat for both teams.
Economic Reports and Events
May 04: Initial Claims 04/29 (8:30 am), Productivity-Prel for Q1 (8:30 am)
May 05: Average Workweek for Apr (8:30 am), Hourly Earnings for Apr (8:30 am), Nonfarm Payrolls for Apr (8:30 am), Unemployment Rate for Apr (8:30 am), Consumer Credit for Mar (15:00 pm)
May 08: -
May 09: Wholesale Inventories for Mar (10:00 am)
May 10: Crude Inventories 05/05 (10:30 am), FOMC policy statement (14:15 pm)
May 11: Business Inventories for Mar (8:30 am), Initial Claims 05/06 (8:30 am), Retail Sales for Apr (8:30 am), Retail Sales ex-auto for Apr (8:30 am)
May 12: Export Prices ex-ag. for Apr (8:30 am), Import Prices ex-oil for Apr (8:30 am), Trade Balance for Mar (8:30 am), Mich. Sentiment-Prel. for May (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
May 04: ATVI (A), ANR (B), AEE (B), AU (?), AIV (?), AVID (?), ACLS (5:00 pm ET), BRL (B), BKHM (A), CNQ (?), CSE (B), CNP (B), CEM (A), CQB (A), CNO (A), CVS (B), EK (B), ELN (B), EGO (A), HLTH (A), GMST (A), ICOS (?), INCY (B), IDCC (B), IIP (A), IP (B), ITG (B), JAH (B), KMG (?), KSE (B), LVS (A), MVL (B), MCK (A), NEW (?), NXL (B), OIS (B), PXP (B), PXP (B), QSFT (A), RGLD (B), TSG (?), STN (?), SU (?), TSO (?), DTV (B), EL (B), PMI (?), THE (B), TOT (02:00 am ET), RIG (B), TRZ (B), TYC (B), UBS (B), UVN (A), VRX (?), WMB (B)
May 05: AGU (?), CRK (?), EP (B), EOG (?), GSX (?), HMY (?), MHS (B), NSR (B), SNY (?), THQI (B)
May 08: ABP (B), ARXX (?), AVNX (?), BBD (?), BLKB (A), CSV (A), CCRT (A), EAGL (A), FLR (A), FTI (A), FTO (?), HW (B), HNT (?), HOC (B), IN (A), MYOG (?), OSIP (A), GOLD (02:00 am ET), SBAC (A), SONS (A), STO (2:30 am ET)
May 09: SIL (?), AZPN (A), ASYT (4:00 pm ET), BIDU (A), ITU (?), CELL (A), CVC (B), CSCO (?), DESC (A), DYN (B), ENTG (B), FCH (A), GTI (B), HSP (B), IDTI (A), LAMR (?), MTSN (A), MYL (A), NMTI (B), PGN (10:00 am ET), SAPE (A), SLE (?), SINA (A), TMTA (A), LCC (B), DIS (?), WGR (B), WFII (A)
May 10: WEL (?), RIO (?), DCEL (?), DQE (B), ENER (?), HJT (B), GSS (A), IVAN (?), MIR (?), MT (?)
May 11: AEM (A), BGO (A), DT (?), EXPE (A), JCP (?), KSS (?), PBY (A), UBB (?), URBN (06:00 am ET)
May 12: DRS (B), PBR (?)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.
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.