Good morning! Friday was another rather slow day in the market. The continuation breakout I was looking for going into the day failed to materialize although the market continued to hold above the prior day's lows. The day began without much of a gap but was followed by medium-paced selling for the first 15-30 minutes of the day. At that point we began to see more of a divergence again between the indices as the NASDAQ turned around and began to make its way back to intraday highs while the SP500 and Dow Jones Industrial Average both began to base along intraday lows.

The NASDAQ formed a small Phoenix on the 5 minute charts going into 10:30 ET as it based along the 5 minute 20 sma resistance at the day's highs. The breakout led to new highs on the week in that index as it ran to put in an equal move on the 5 minute charts as compared to the 9:45 bounce off lows. This price resistance held, along with the 10:45 ET reversal zone, leading a turn over in that index heading into lunch. At the same time, the SP500 and Dow were still holding lows, so this resistance in the stronger NASDAQ only served to trigger a breakdown in the other two which lasted into 11:30 ET when volume spikes, creating exhaustion as it ran into equal move support on the 5 minute charts as compared to the initial drop out of the open.

I wasn't able to stick around for the rest of the day on Friday, but the action didn't get much more exciting. The range basically held into the close, although the NASDAQ did manage to make very slightly higher highs after 14:00 ET. After the market pivoted off 11:30 ET lows, it just crept higher until the SP500 and Dow first hit the price resistance from the 10:45 ET breakdown. Then it broke higher to make it back to morning highs price resistance. At that point it formed a 2T by just slightly breaking the prior highs at this strong resistance level, hitting it at a slower pace than the prior one. This led to a more rapid pullback into the 15:00 ET reversal period where price and moving average support held on the 5 minute charts until the end of the day.

We still don't have any strong patterns forming on the 30-60 minute charts for a larger pullback from these highs, but the slower than average upside pace on Friday means that should the market decide to correct more from recent highs, it can do so very quickly. As such, use greater caution on new longs as short term patterns unless the market creates a slower pullback from highs on its next correction on the 15-60 minute charts.

AAP from the $51.88 zone on the 25th is correcting a bit on the daily after two strong weeks. Highs of $59.85. Trailing stop initiated for position trades. May 18th earnings. ASKJ on the weekly charts has also broken higher. From last week, BBI long is also still of interest. VAR, ALGN and ADTN long all have broken out. VAR from 5/11 has tight trailing stops initiated. Triggering a breakout just under $34, it has highs of $37.43. ADTN as short term trades have hit trailing stops and have 20 day sma support for longer term.  LCAV triggered a continuation on Friday over $41.50, higher than the prior day due to the gap. Friday lows are now support.

Economic Reports and Events
May 23: -
May 24: FOMC Minutes (2:00 pm)
May 25: Durable Orders for Apr (8:30 am), New Home Sales for Apr (10:00 am)
May 26: Chain Deflator-Prel. for Q1 (8:30 am), GDP-Prel for Q1 (8:30 am), Initial Claims 05/21 (8:30 am), Help-Wanted Index for Apr (10:00 am)
May 27: Personal Income for Apr (8:30 am), Personal Spending for Apr (8:30 am), Mich. Sentiment-Rev. for May (9:45 am)
May 30: -
May 31: Chicago PMI for May (10:00 am), Consumer Confidence for May (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 stocks' earnings dates 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 23: CPB(?)
May 24: CSC (A), GME (B), NTAP (A), SEAC (A), VOD (?), WSM (?)
May 25: AZO (B), DLTR (B), KMG (?), MIK (A), ¸NOVL (?), PETC (?), WIND (A)
May 26: CHS (A), CA (?), COST (B), CMOS (12:00 pm ET), DG (B), FRED (B), HNZ (07:00 am ET), PDCO (B), TECD (?), TIVO (A), TOL (?)
May 27: -
May 30: -
May 31: FRO (?), HOV (A), SMTC (A)

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.