Good morning! I hope you all had a relaxing holiday weekend. The market was tame heading into the extended weekend. Volume was light and the range was narrow, both of which are typical of the Friday before Memorial Day. The morning started out on a weak note. After opening near Thursday's close, the indices fell into a range for the first 30 minutes of the day. Before long they were giving way to more selling on the 5 minute charts, leading to an equal move drop on that time frame as compared to the move off the prior afternoon's highs into the open. There the market found support at the 10:15 ET reversal period and the market made a slow recovery throughout the remainder of the morning.

The volume continued to decline as the day wore on. After coming back into morning highs, the indices fell sideways for about an hour into the 13:00 ET reversal period. With volume around its lowest point all week, the breakout to highs from the 15 minute Cup with Handle was very solid, but with so few market participants, it did not really get far. The rally stalled within 30 minutes as the indices towards resistance from the highs of the range on the 60 minute charts.

The market again based from about 13:30 into 14:00 ET. At that point the 5 minute 20 sma hit, serving as support and the volume dropped off once more to create a small Bull Flag going into the reversal period. The reward potential was not great since there were only two hours left on a day when many traders, if they showed up at all, were taking off early. The flag did manage to make it into the week's highs, however, which held the indices in for the remainder of the day since the lack of participants left little power to break them.

As this shortened trading week begins, I have found a rather large number of buy setups on the daily charts. The NASDAQ does make me nervous, however, because it is at prior highs from March and the SP500 and Dow Jones Industrial Average have lagged a great deal behind it. While looking for a reason for a daily correction last week, all I was able to find was a range in those two indices while the NASDAQ plowed ahead. I am now more inclined to go with the individual buy setups in the market, but remain more cautious as to the potential for a larger daily correction in the market as a whole.

AAP from the $51.88 zone on the 4/25 is correcting a bit on the daily after two strong weeks. Highs of $59.88. Trailing stop initiated for position trades. ASKJ on the weekly charts has also broken higher into $30.86 from 5/18. VAR from 5/11 has a tight trailing stops initiated. VAR triggered a breakout just under $34, it has highs of $38.46. LCAV triggered a continuation on Friday over $41.50, higher than the prior day due to the gap. It hit highs of $45.35. Some trailing stops hit. CI trigger on 5/26 with the break of $97.55 and hit highs of $99.10. It continues to look well heading into the new week.  Additional stocks of interest on the upside are SBC, UNH, RT and GR. On the opposite side, WEN is forming a 2T on the daily charts and looks to head lower.

Economic Reports and Events
May 31: Chicago PMI for May (10:00 am), Consumer Confidence for May (10:00 am)
Jun 01: Construction Spending for Apr (10:00 am), ISM Index for May (10:00 am), Auto Sales for May (12:00 am), Truck Sales for May (12:00 am)
Jun 02: Initial Claims 05/28 (8:30 am), Productivity-Rev. for Q1 (8:30 am), Factory Orders for Apr (10:00 am)
Jun 03: Average Workweek for May (8:30 am), Hourly Earnings for May (8:30 am), Nonfarm Payrolls for May (8:30 am), Unemployment Rate for May (8:30 am), ISM Services for May (10:00 am)
Jun 06: -
Jun 07: Consumer Credit for Apr (3:00 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 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 31: FRO (?), HOV (A), SMTC (A)
Jun 01: CMVT (A), JOYG (B), MBT (07:00 am ET), PLL (A)
Jun 02: CIEN (B), TTWO (A)
Jun 03: SFD (?)
Jun 06: CMGI (A), ZQK (?)
Jun 07: ABS (?), COO (A), TOY (?)

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.