Good day! A bearish open in the market built upon itself throughout the session on Monday following Fed Chairman Bernanke's speculation that inflation could be higher than expected. This increased speculation that the end to the Fed rate hikes is, in fact, not in sight as anticipated. By the end of the day the Dow Jones Industrial Average had shed 188.15 points, the S&P 500 lost 22.93 points, and the Nasdaq Composite fell 49.79 points. All in all, not a pleasant market for the bulls.

The market didn't even attempt to break through the daily resistance we were looking at as holding in Friday's highs. Instead, the bearish bias intraday heading into Monday morning followed through with a downside gap and immediate selling into about 10:00 ET. This landed the Nasdaq Comp. at its 5 minute 200 simple moving average support and was near Friday's lows. The Dow experienced the greatest relative weakness and was under Friday's lows within minutes of the open, hitting equal move support on the 15 minute breakdown as the Nasdaq came into its support zone.

Volume was lighter Monday morning than at the start of most of the recent sessions and it dropped off even more as the indices corrected from the 10:00 ET support. Declining volume in the face of an upside move played favorably into the hands of the bears. The pace on the buying began to turn over due to lack of interest, and by early afternoon the indices were re-testing their intraday lows. A low-level base ensued, followed by a breakdown into 14:00 ET.

The market saw volume come in once the sellers began to take over again. The downside pace increased and the market quickly put in an equal move on the 15 minute charts as compared to the prior 15 minute selloff. This equal move support level hit in the Dow around 14:30 ET and the indices began more choppy at that point. The selling continued into the close, but with a great deal more overlap in price from bar to bar. Both the Nasdaq and the Dow gave back more than 50% of their correction off last month's lows by the time the closing bell was rung.

The top losers on Monday were the home builders, falling 3.9% on the day. Biotechs, semiconductors, computer hardware and internet stocks all also experienced significant losses. Of the 30 stocks that make up the Dow, only Disney closed in positive territory, and it barely managed that after falling off highs for the last two hours of the day.

The market still looks weak going into Tuesday, but I'd like to see some correction on the 15 minute charts before looking for strong intraday continuation setups in that direction. The 2-5 minute charts can still easily see more downside, but an exhaustion move began to set in going into the close on Monday and it will have a hard time continuing much past the open on Tuesday.

Economic Reports and Events
June 6: -
June 7: Crude Inventories 6/02 (10:30 am), Consumer Credit for Apr (3:00 pm)
June 8: Initial Claims 06/03 (8:30 am), Wholesale Inventories for April (10:00 am)
June 9: Export Prices (ex-ag) and Import Prices (ex-oil) for May (8:30 am), Trade Balance for April (8:30 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
June 6: MATK (A), RYAAY (?), COO (A)
June 7: BMC (A), FNSR (A), HRB (A), UTIW (B)
June 8: NSM (?), SHFL (A), SFD (A)
June 9: -
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.