Good morning! For the first time since May 10, the market managed to close above the prior day's highs on Thursday. Nevertheless, the day was not a terribly active one. A modest upside gap kicked off the session following the 8:30 GDP and initial claims data. The economy grew at a 5.3% annual rate last quarter according to the first revisions on the GDP estimates. This was somewhat under expectations of 5.6%. The core price index, measuring inflation, was unchanged from initial estimates, at a 2% annual rate. First-time claims for unemployment benefits fell to 329,000, a decrease of 40,000 from the prior week.

The market had a bit of a difficult time sustaining the early morning gains, especially in the Nasdaq Composite. The S&P 500 and Dow Jones Industrial Average held up a bit better due to strength in oil services, energy, and metal stocks, but the Nasdaq began a strong selloff shortly before 10:00 ET that led to a closure of the morning gap before finally turning back around with the 10:45 ET reversal period. During this time the Dow became wedged between the prior day's highs and the 5 minute 20 and 200 simple moving average support and based along highs.

The market began to gradually move higher into 11:00 ET, but didn't pick up pace until around 11:30 ET with a slight cup with handle pattern on the 5 minute charts. By this time the volume had declined dramatically as compared to recent sessions and the lighter volume on the selling Thursday morning was actually conducive to the market retesting the highs. Since the downside momentum overall was weak, it showed a lack of continued fear (although perhaps because bulls who were still around were too shell-shocked to bail by that time and resolved to not do anything!)

This late morning buying took both the S&P 500 and Dow into prior highs on the 15 minute charts as well as into the 15 minute 200 sma resistance level intraday. The Nasdaq, which had experienced a much stronger move off morning highs, rallied at about the same pace as the prior selloff. This made the early morning highs a significant resistance level that held well as the other two indices came into the higher resistance zones. All of them hit with the 12:00 ET reversal period, a powerful mid-day correction time.

This time around the Nasdaq corrected as gradually as the other two indices as volume continued to decline into the early afternoon. A similar buy pattern developed as compared to the early morning one, first breaking the downtrend channel at about 13:30 ET and then forming a continuation pattern into 14:00 ET. The continuation allowed for some stronger upside, but the light volume on the day and a lot of overhead resistance on the 15 minute charts continued to hold buyers in check. The same could not be said of EBAY, however, after it announced that it was forming an alliance with Yahoo and gapped up strongly into the open. It rounded off at mid-day lows and then took off to much higher intraday highs following 14:00 ET.

The market overall did continue to move higher into the close, but it did so in smaller steps then the 11:30 ET move. The 14:00 ET move hit resistance at the Nasdaq's 15 minute 200 sma and the 12:00 ET highs in the S&P 500. This pushed them into another range on the 5 minute charts with the 15 minute 20 sma continuing to serve as support. That support hit again at the 15:00 ET reversal period and helped guide the market into a close right at the day's highs. By the end of the day the Dow posted a 93.73 point gain, the S&P 500 added 14.31 points, and the Nasdaq rose 29.07 points.

Due to the market being closed on Monday for Memorial Day, Friday's session is likely to be another slower one. Typically the day before a three day weekend begins with decent patterns in the morning, but volume tends to dry up as the day progresses. The first 90 minutes of the day is often the most active. While patterns will still develop throughout the remainder of the day, there generally are not as many and it becomes preferable to look for setups on larger intraday time frames than you tend to typically focus on. For instance, scalpers who trade mainly off 2-5 minute charts would want to look more on 5-15 minute charts. Due to the rounding off at this week's lows, I am expecting them to hold into the weekend.

I wish you all a happy and safe holiday!

Economic Reports and Event
May 26: Personal Income and Personal Spending for April (8:30 am), Michigan Sentiment-Rev. for May (9:50 am)
May 30: Consumer Confidence for May (10:00 am), Chicago PMI for May (10:00 am), Crude Inventories 5/26 (10:30 am), FOMC Minutes for May 10 (2:00 pm)
June 1: Auto Sales for May (12:00 am), Truck Sales for May (12:00 am), Initial Claims 5/27 (8:30 am), Productivity-Rev for Q1 (8:30 am), Construction Spending for April (10:00 am), ISM Index for May (10:00 am)
June 2: Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate for May (8:30 am), Factory Orders for April (10:00 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 26: CBRL (B)
May 29: -
May 30: ABS (?), CA (A), VOD (2:00 AM ET)
May 31: ADCT (A), COST (B), DBRN (A), HOV (A), NOVL (A), SIGM (?), TIF (B)
June 1: CIEN (?), DG (B), HNZ (B), PLL (A), PMTK (?), NX (?), WIND (A)
June 2: -
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.