Good day! After a slow, but steady uptrend on Thursday, the market reversed and corrected from this move heading into the weekend. The pace of that correction was even more gradual than the prior day's buying leaving the market in a larger trading range on the 120-minute charts to begin the new week. The light selling dominated the morning and early afternoon. Despite a slight move off lows into the last several hours of the day, the Dow Jones Industrial Average lost 36.34 points, the S&P 500 fell 5.07 points and the Nasdaq Composite shed 14 points by the end of the session.

 
 

The session began on Friday on a weak note when the market gapped into the lower trend channel support from Thursday and then busted that level with the Nasdaq once again regaining control of the bears. That index saw the greatest retracement of the prior day's range early on, although the Dow and S&Ps made up for it with stronger mid-day selling. This came after a period of range bound trading into the latter half of the morning as the indices pulled back up into the highs of the day, but were unable to close the moderate gap. Instead, the 5 minute 20 sma resistance held firm and selling once more took over into noon.

The market found mid-day support at the 12:00 ET reversal period. This was followed by a bear flag on the 5 minute charts as they once again pulled up into the 5 minute 20 sma. This time the pace was more gradual on this upswing and volume declined steadily into the resistance. The reaction led to another new intraday low, coming into the zone of Thursday's morning lows. Since they hit that support at a much more gradual overall pace, however, they came up short of an exact retest of those prices and instead began to reverse out of 13:30 ET.  It is common that a second test of support or resistance does not quite hit the same price level, particularly if it comes into that support or resistance with varying momentum.

I am not expecting things to pick up a great deal this week as we near the end of earnings season. A lot of folks believe we will be heading higher over the next several weeks. I would prefer to see another flush lower before pinning too many hopes on the upside though. In order for the bulls to gain a strong foothold, that selling would need to either be a lot slower than the decline on Wednesday, or slow with rounded lows at support instead of putting in more of a "V" pivot at lows. The market has currently had two tests of support on the 120-minute charts. Usually the break of that support occurs on a third test. A strong breakdown would leave the market more susceptible to the scenario I laid out on Friday, whereby an initial breakdown attempt is followed by a pullback up into the range and then continued selling. Right now things are pretty much up in the air since we need to wait to how this range continues to play out.

Economic Reports and Events
Aug. 14: -
Aug. 15: Core PPI and PPI for July (8:30 am), NY Empire State Index for Aug. (8:30 am), Net Foreign Purchases for June (9:00 am)
Aug. 16: Building Permits, Core CPI, CPI and Housing Starts for July (8:30 am), Capacity Utilization and Industrial Production for July (9:15 am), Crude Inventories 8/11 (10:30 am)
Aug. 17: Initial Claims 8/12 (8:30 am), Leading Indicators for July (10:00 am), Philadelphia Fed for Aug. (12:00 pm)
Aug. 18: Michigan Sentiment - Prel. for Aug. (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.
Aug. 14: A, ABV, BGO, CA, HEW, MED, NWRE, NTES, NVAX, SSRI, RNAI, SYY, VAL, WRNC
Aug. 15: ANF, AEOS, AMAT, BRL, BJ, DE, DKS, FOSL, HAR, HD, PETM, SKS, SNDA, SPLS, STP, TJX, UBS, WMT
Aug. 16: ARXX, BEAS, BLI, CAI, CHRS, DAKT, HPQ, HOTT, NTAP, ROST, CRM, SNPS, TLB, EL, TWB, ZUMZ
Aug. 17: ARO, ADSK, BKS, BEBE, BRCD, CHL, CLE, CPWM, DELL, GME, GPS, HIBB, LTD, MRVL, NWY, JWN, SHLD, PLCE
Aug. 18: ANN, FL
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.