Good day! The market had another rough day to end a choppy week on Friday. It began with a pullback to the 5 minute 20 sma support intraday after a very slight upside open. From there it just chopped around until the 10:45 ET reversal period hit. At that point the bottom pretty much dropped out. Selling hit very quickly without much notice aside from a 5 min setup, and without the notice for such a strong move. The indices did have a decent 5 minute sell pattern the form of a double top intraday in the SP500 and Dow Jones Ind. Ave., while the NASDAQ was forming a nice Avalanche short coming out of a Head & Shoulders pattern. The follow through, however, was much strong than those two patterns alone tend to generate.
The SP500 hit some initial support at the morning lows, but that only stalled the selling for few minutes and the NASDAQ didn't slow at all. It wasn't until about 11:20 that we saw exhaustion coming into the market as the volume spiked with the indices hitting lows from the prior couple of days. After a hammer candlestick pattern (tall candlestick with a larger lower tail, the market began to correct. Due to the extreme selling, the 5 minute 20 sma, which would typically lead to a nice 5 minute Bear Flag, was only able to bring the market back into the zone of the prior lows, not even giving much room for a scalp trade. This led to a longer base into the afternoon. 
Whenever you get a move in just 15 minutes or so that takes up an average day's range, it's very hard for the market to keep going. Friday was no different. The pace within the range going into the afternoon never turned back over to allow for further selling into the afternoon. The pullbacks remained a bit slower while the upside pace within the range picked up. With the last reversal period of the day at 15:30 ET the market spiked, heading straight up into the 5 minute 200 sma resistance and the prior day's range before it stalled for the last few minutes of the day. Afterhours the buying continued and we are heading into Monday with the futures trading above Friday's highs.
During my scanning over the weekend I wasn't really able to come up with much for low risk patterns forming heading into the new week. As a result, I'll just be looking intraday for setups. Given the late days buying on Friday, I'm a bit more bullish since this is showing a better reaction to the support levels we were watching heading into the week, but without a strong intraday setup I don't intend on being very aggressive.
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.
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