Good day! Over the course of the past month or so, while summer has wound to a close, the intraday ranges in the indices have been much narrower than average. Friday was no exception. This has been accompanied by a decline in volume with many of the major market sites taking a "wait and see" attitude with strongly hedged wording. It seems that folks are hanging on every word that comes out about the economy, or at least professing to, but then reacting very little. The only strong exception was last Thursday's labor data.

I can't argue much with this attitude. Things have certainly slowed a great deal in recent months, with the later half of August being particularly uneventful. This hasn't translated to all areas of the market, however, and many stocks have been impervious to this slowdown. A number of apparel and health services stocks, for instance, made incredibly strong moves on Friday and have been putting in healthy gains. AEOS, ANN, DF, and HNT are a few of the recent gainers. Healthcare-related Reits, such as HPT, HCP, and HCN, have also been showing a great deal of strength. On the other end of the spectrum, there have also been a lot of significant losers. Many of these have fallen in the oil services, fuel, and metals sectors and are still showing room for further selling into this week.

Although these pockets of relative strength and weakness are still out there, providing room for short term market participants, it's been very important to not press to hard. Many habits that work well in a strongly trending market with wider intraday ranges will simply not work as well at this time. A great way to help weed through stocks for daytrades is to pay attention to the larger time frames, and not just a 5 minute chart for instance. If there is not a lot of overhead resistance on a daily chart, it's going to be easier for an intraday buy pattern to follow through with strong gains. Unfortunately, it can often be easy to overlook this fact when hunkered down in "daytrade mode." This is why I have a daily chart up on my scanning screen right next to my 1, 2, and 5 minute charts.

The recent activity, or lack thereof, in the overall market has made EMini trading less favorable. There are still setups, and support and resistance levels continue to hold extremely well, but they lack the momentum and have a lot of overlap from bar to bar on all the intraday time frames. This limits potential gains and makes it easier to give back gains more quickly or even get flushed out only to then see the index turn back around to fulfill an initial bias. As such, I've done very little EMini trading over the course of the last couple of weeks while volume has been on the lighter side.

I don't see any sign at this time that the market is going to break this recent pattern of activity, so the easiest way to resist getting trapped in this case is much like my advise for those trading equities: watch the larger time frames. In this case though, the 15 minute charts have been immensely helpful. On Friday, a good example of this was looking at how the market opened with choppy trading throughout the morning, but on the 15 minute charts the indices began to hug the 15 minute 20 simple moving average into noon. As the 12:30 ET reversal period hit the indices pivoted off earlier support and began to break out of that trading range.

The mid-day breakout in the market was very comparable to the activity from the prior day over lunch. Once the 15 minute 20 sma zone broke, the indices were able to continue higher into resistance on those 15 minute time frames, based on price levels from the past several weeks, as well as the 15 minute 200 sma on the Dow.  The remainder of the session was a reaction to these resistance zones, again giving very little for opportunity without substantially increased risk for index traders.

It's currently just after 3:00 am ET and at this point the bears have already retrieved Friday's hesitant gains, moving decisively lower in the futures market. In the Nasdaq Composite there is not a great deal of support until the 50 day sma. In the S&P 500 and Dow Jones Ind. Ave. this is going to be the combination of 50 and 100 day sma. The prior daily lows from a few weeks ago will serve as a little support, but are not as significant given the increased pace of the downside since last week. I came up with a much larger list of weakening stocks as possible short setups than the other way around yesterday. I am just hoping that the market gap still leaves room to take advantage of the selling intraday (although I think I will not open my IRA portfolio, which has a number of stocks that need to correct some at this point and will likely use this as an opportunity to do so!).

Note: The current futures contract is December (Z). For continuity, I have continued to use September's contract (U) for the images here since the activity is nearly identical at this point.

Economic Reports and Events
Sept. 11: -
Sept. 12: Trade Balance for July (8:30 am)
Sept. 13: Crude Inventories 9/8 (10:30 am), Treasury Budget for Aug. (2:00 pm)
Sept. 14: Business Inventories for July (8:30 am), Export Prices ex-ag. and Import Prices ex-oil for Aug. (8:30 am), Initial Claims 9/9 (8:30 am), Retail Sales for Aug. (8:30 am)
Sept. 15: Core CPI and CPI for Aug. (8:30 am), NY Empire State Index for Sep. (8:30 am), Capacity Utilization and Industrial Production for Aug. (9:15 am), Mich. Sentiment-Prel. for Sep. (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.
Sept. 11: CPB
Sept. 12: BBY, ENER, GS, PLL, KR
Sept. 13: LEH, XLNX
Sept. 14: ADBE, BSC, PIR, TEK
Sept. 15: -
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.