Good day! Mounting Middle East turmoil and a poor start to the current earnings season sent the market lower on Friday for the third day in a row. The action was not as extreme as Thursday, however, and most of the selling came in the morning. By the end of the day the Dow Jones Ind. Ave. ($INDU) posted a loss of 106.94 points, the S&P 500 ($SPX) was down 6.09 points, and Nasdaq Composite ($COMPX) had fallen 16.76 points. Among the top losers on Friday were DHI, AMR, BZH, CHE, MTH, GE, BSCI, BIIB, KYPH, and NYX.

Oil, utilities, and precious metals were the best-performing sectors on Friday, driven in large part by the escalating violence between Israel and Lebanon this past week and tensions surrounding North Korea and Iran's nuclear ambitions. Gold gained 5.2% last week ($13.60/oz on Friday) with August delivery at $668.0 on the New York Mercantile Exchange. This marks the highest close in about 6 weeks. August deliver on crude rose as high as $77.95/barrel on the Merc., which was a record intraday high for a front-month contract in the regular trading session. It closed at a record $77.03/barrel. At the pump on Friday, the average price for a gallon of gasoline was a whopping $29.958, 27% higher than this time last year. Natural gas also rose significantly in recent trade, gaining 15% in the past week alone.

In the rest of the market the bears continued to push lower right away out of the open, continuing the selling pressure we were looking for heading into the day. This initial decline lasted until about 10:00 ET and was followed by a bear flag into the 5 minute 20 sma and the 10:45 ET reversal period. The second wave of intraday selling was stronger than the first, leading to an exhaustion move on the 15 minute charts as volume began to spike into 11:00 ET. The downside move slowed, but continued into 11:30 ET when the Dow ran into strong price support from last month's lows. Such a significant support level on a larger time frame helped the market find a little balance for the remainder of the day.

As we know from past experience, the market will typically break the 15 minute 20 sma resistance on a downtrend after 2.5 to 3 days of selling. That made continued shorting into Friday afternoon higher risk, since by that time it had passed the 2.5-day mark. There was still some potential since it had not yet been three days, but the weekend loomed, aiding in pushing the market towards a larger correction to the decline.

Despite the support, the overall pace of the morning selloff was still very steep, hence preventing the market from rapidly reversing off the lows. The Nasdaq and S&P also lacked similarly significant support zones. Instead, the indices fell into a trading range for the remainder of the day, holding support and resistance very well on the 5 minute charts going into the close. As a result, unless one decided to trade the pivots as scalps, there wasn't much left to do with the rest of the day.

It is not unusual that once the market breaks the 15 minute 20 sma after 2.5-3 days of selling, that instead of turning over, it will create a longer correction, such as a bear flag, and then form another downtrend move intraday. Given the concerns in the Middle East and the action so far this earnings season, this stands as a strong possibility heading into the start of this week.

While last week was an excellent one for swingtrades, I prefer to focus more on the 5-30 minute setups this week and not be as aggressive with new swing and position trades. A lot of the daily buy setups I am looking at are not typical breakout/flag setups, such as last week's were, but they can often have some strong daily moves and would have swingtrade potential. They include NSM, ASO, HCA, and RF. CPL from the 29th, UTIW from the 10th, and TSRA on Friday are a couple of the recent ones in this category that have served me well. On the downside I am watching BIIB and SAFC.

Economic Reports and Events
July 17: NY Empire State Index for July (8:30 am), Capacity Utilization for June (9:15 am), Industrial Production for June (9:15 am)
July 18: Core PPI and PPI for June (8:30 am), Net Foreign Purchases for May (9:00 am)
July 19: Building Permits for June (8:30 am), Core CPI and CPI for June (8:30 am), Housing Starts for June (8:30 am), Crude Inventories 7/14 (10:30 am)
July 20: Initial Claims 7/15 (8:30 am), Leading Indicators for June (10:00 am)
July 21: Philadelphia Fed for July (12:00 pm), FOMC Minutes - June 29 (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 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
July 17: C (B), CBH (B), CCK (A), ETN (B), TV (A), HDI (B), MAT (?), NBIX (A), NVS (B), PHG (?), GWW (B)
July 18: ADTN (?), AMTD (?), ASO (B), CHKP (A), CNW (A), CSX (A), DTAS (A), FDG (?), ILMN (A), IBM (?), KEY (B), MER (?), MTG (B), NBB (B), PKG (A), STT (B), KO (B), NYT (B), USB (B), UTX (B), WFC (B), YHOO (?)
July 19: ABT (?), ADS (?), DOX (?), ASD (?), APH (?), AMR (?), AAPL (A), ASML (?). AZR (A), BAC (?), BCR (A), CDWC (B), CIT (B), CBSS (?), CBST (A), ET (A), EBAY (?), EFII (A), FHN (A), FLIR (B), GD (B), GPC (B), HST (B), INTC (A), ISIL (A), JPM (B), JNPR (A), KEA (?), NITE (B), LRW (A), LRCX (?), MAN (B), MEL (B), MOGN (A), MGI (?), MOT (A), NTRS (?), NVLS (?), JNC (B), NVEC (?), PNC (?), PLCM (?), QCOM (A), RDN (A), RMBS (?), RYL (B), SSTI (?), LUV (B), STJ (B), STI (B), SWFT (?), SNV (?), TER (A), ALL (A), BK (B), TMK (A), UIS (B), UNH (B), WM (A), YUM (A)
July 20: ACMR, AME, BAX, BBT, BLS, BHE, CBOT, CHIC, CHZ, CPS, CMA, CAL, CBE, DHR, CY, DJ, DHI, ELNK, ENDP, EFX, FCS, F, IMCL, ITW, LSTR, LOGI, MMR, MDC, MEDI, NE, NOK, NCX, NVR, ORB, BTU, PFE, PPG, REDF, RS, RIMG, SAP, SCHL, SLM, SMMX, TXT, TMK, TRAD, TZOO, UTEK, USAP, WB, WFT, AMD, AFFX, AH, AVID, BRCM, BTUI, COF, CERN, CHRT, COHU, CPWR, DST, FFIV, GILD, GOOG, HAL, HYSL, INFA, NSIT, XXIA, LAUR, LEG, MENT, MSFT, MDCC, MROI, NDAQ, PDFS, RLI, RSAS, SCST, TPX, XPRSA, VRSN, XLNX, and ZHNE.
July 21: ACO, ACI, CAT, LLY, GAP, HBAN, IUSA, ERICY, NUE, RSH, SLB, SEPR, WL, and CYT
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.