Good day! Monday began on a bit of a weaker note than I was anticipating the night before. The slight downside we saw Sunday evening built on itself after Iran announced that it has no intentions of suspending its nuclear ambitions and will ignore the U.N.'s July resolution that threatens sanctions if they don't comply by August 31st. Precious metals, oil services, and energy all rallied on the news, but the rest of the market was hit with a relatively decent downside gap. Despite the weakness, however, volume was light on this early morning selling and would remain so throughout the day.

The light volume indicated that the market had a more difficult time rounding up players on either side following the open. Initially the market tried to turn over by pivoting strongly into the 5 minute 20 simple moving average resistance around 10:15 ET, but it fell even more quickly off that resistance and into a longer trading range along lows as the morning progressed. An initial breakdown attempt with the 11:00 ET reversal period gained some momentum into noon, but the support from prior lows in the Dow Jones Ind. Ave. and Nasdaq Composite on the 15 minute charts held strongly at the 12:00 ET reversal period and the market bounced into the early afternoon.

The upside momentum into the 13:00 ET reversal period was similar to the selling pace, but managed to move further than the last wave of downside intraday and pushed the indices back into the morning highs. Once again the move occurred on light volume. In fact, it was some of the lightest volume of the entire session. After hitting the morning price resistance at the same time as the 15 minute 20 sma resistance, the indices once again pulled back.

The Nasdaq and S&P 500 both hugged their 15 minute 20 sma throughout the correction, forming a choppy Phoenix buy setup into the last hour of the day. After hitting an equal move as compared to the mid-day bounce, however, the buyers backed off and the market sold off slightly once more into the close, ending the session close to opening prices. As compared to Friday's close, the Dow lost 36.42 points, the S&P 500 lost 4.78 points and the Nasdaq lost 16.20 points by the end of Monday's session.

I am expecting a lighter week of trading with a good chance for that to continue into next week as well. Most kids are heading back to school and summer vacations will wrap up with Labor Day (celebrated next week by a three day weekend into Monday).  I'm going to be out of the office myself most of Wednesday and into Thursday as we pack up our godchildren and send them back to Iowa for the school year.

In terms of the market direction at this time, the indices are going to have a bit more difficulty trying those new highs on the month, but I still don't see much to suggest any strong selling coming in overall. We have a bit of risk this week for downside, but my main concern remains with the Nasdaq which is showing the greatest weakness.

I am expecting to continue to take things very cautiously over the next two weeks with fewer trades than average and based mainly on intraday setups. I do have a list of weekly charts I am monitoring for shorting opportunities as longer term trades, however, which include ATI, CMC, JLG, SKYW, UCBH, TRN and MHO. On the long side I like FCX and GLG, but both are a bit extended here intraday due to strong upside on Monday.

Economic Reports and Events
Aug. 22: -
Aug. 23: Existing Home Sales for July (10:00 am), Crude Inventories 8/18 (10:00 am)
Aug. 24: Durable Orders for July (8:30 am), Initial Claims 8/19 (8:30 am), New Home Sales for July (10:00 am)
Aug. 25: -

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. 22: BGP, INTU, MDT, TOL
Aug. 23: BHP, CHS, CWTR, DLTR, EV, MIK, PSS, PTR, PVH, TECD
Aug. 24: PDCO, WSM
Aug. 25: -
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.