Good day! After establishing one of the strongest weeks of trading this year, the market followed up on that feat with one of the narrowest week-long trading range this past week. Friday was particularly grueling as the market treaded water throughout most of the session with few intraday patterns to take advantage of.

After a modest downside gap into the open, taking the Dow into the lows of the week, the market took off. News of a tropical weather system (Ernesto) moving towards the Gulf aided in pushing the oil sector higher, making oil services one of the strongest sectors of the day. The morning upside gap in that sector continued with strong buying for the first 35-40 minutes of the session. At the same time the rest of the market also moved significantly higher intraday. This buying abated only as the Nasdaq Composite and S&P 500 ran into prior daily highs and the weaker Dow hit its 15 minute 200 simple moving average intraday.

Even though volume increased on this early morning rally, the market was unable to hold onto most of the gains. The indices turned over around 10:10 ET and pulled back fairly quickly. The selling was more gradual than the prior upside move, but it was still stronger than average. This meant that it would have a tougher time breaking to new intraday lows without some sort of mid-day correction off lows.

Several small waves of selling on the 2-5 minute charts finally landed the indices at support shortly after 11:30 ET. In the S&Ps this was Wednesday's closing price. In the Dow it was Thursday's lows. In the Nasdaq it was the 5 minute 200 sma and 15 minute 20 sma. So, although all three indices came into different support levels into noon, all three hit them at the same time, making it easier to hold than if only one or two was running into support on these time frames.

The S&Ps and Dow bounced quickly off the mid-day support initially, but the buying stalled in all three indices at the 5 minute 20 sma and volume dropped off significantly at noon. The Nasdaq began to hug its 15 minute 20 sma while both the Dow and S&Ps also fell into a very choppy range over lunch. The upside within the range was initially slow enough to allow for the possibility of a breakdown into the afternoon, but the ideal time for such a move would have been 14:00 ET and the sellers failed to show. Folks seemed hesitant to place much money on the line into the weekend after so little direction throughout the week. Instead the mid-day range broke higher, but the buying remained light and the wider range set early on in the day held.

The overall market is still in a corrective mode following the strong upside earlier this month. The gradual move higher on Friday afternoon with the indices hugging support on light volume is more bearish for the market heading into Monday. I am expecting strength to remain in the oil services as tropical storm Ernesto gains strength. Speculation at this point is that it could easily be a category 3 hurricane by the time it makes landfall. By Monday afternoon we should have a little bit better of an idea on the general area of the gulf coast that is most at risk, but it won't be until the middle of the week that it makes landfall. As we all know by now, a lot can happen between now and then.

This week is going to be more active for economic reports, most notably consumer confidence and the employment data which will come out towards the end of the week. I am anticipating that the range will widen as compared to last week, but next weekend is going to be a three day weekend since the market is closed next Monday for Labor Day. As such, I don't expect volume to increase too dramatically this week. Next Friday is also likely to be slow due to the holiday, particularly after the first two hours of the day.

Economic Reports and Events
Aug. 28: -
Aug. 29: Consumer Confidence for Aug. (10:00 am), FOMC Minutes Aug. 8 (2:00 pm)
Aug. 30: Chain Deflator-Prel. Q2 and GDP-Prel. Q2 (8:30 am), Crude Inventories 8/25 (10:30 am)
Aug. 31: Initial Claims 8/26 (8:30 am), Personal Income and Personal Spending for July (8:30 am), Aug. Chicago PMI (10:00 am), July Factory Orders (10:00 am), July Help-Wanted Index (10:00 am)
Sept. 1: Aug. Auto and Truck Sales (12:00 am); Aug. Ave. Workweek, Hourly Earnings, Nonfarm Payrolls and Unemployment Rate (8:30 am), Aug. Michigan Sentiment-Rev. (9:50 am), July Construction Spending (10:00 am), Aug. ISM Index (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 stock's earnings date before holding a position overnight.
Aug. 28: RSTO
Aug. 29: ADCT, COCO, NOVL, SAFM, SMTC, SIGM, LNUX
Aug. 30: JDSU, LTXX, NCS, TIVO
Aug. 31: CHT, CIEN, DG, DLM, HRB, HNZ, JOYG, KWD, OVTI, SYX, TIF, PAY, ZLC
Sept. 1: VIP
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.