Good day! The market was not fazed by news of nuclear tests out of North Korea on Monday. It opened only a few ticks off Friday's close and then resumed the choppy trading that permeated the prior two days of trading. The indices pulled lower into 10:30 ET, but volume was lighter than we have seen for quite awhile. By the end of the day volume on the Big Board came in at 1.26 billion with 1.52 billion on the Nasdaq. After only a slight move lower, the Nasdaq Composite came into support at the 5 minute 200 sma. That support level held and the indices rolled over, showing some greater momentum on the upside into 11:00 ET.

Light volume along resistance at 11:00 ET gave way to the strongest upside move of the day. The Nasdaq Composite busted through prior highs on its third test of the resistance of last week's highs, making a new 5-month high. The S&P 500 and Dow Jones Ind. Ave. ran into resistance from prior 5 minute highs just before noon and this price resistance way-laid the buyers going into the early afternoon. They made an attempt to keep moving higher in the second half of the day, but the volume remained light on the upside and the pace of the buying was slow with a lot of downside flushes, particularly in individual stocks attempting late day breakouts. This made it a much more difficult market for daytraders who could easily be correct in the larger direction of a stock intraday, but then get flushed by moves that would take out traditional stops under previous support levels.

The bulls finally gave up when the 15:00 ET reversal period rolled around. The market flushed quickly following a closure of the S&P 500 gap from Friday morning, but it only lasted about 15 minutes before again finding support. The 5 minute 200 sma in the Dow and S&P 500 held once more and the indices moved slowly higher off that level out of the final reversal period of the day at 15:30 ET. The end result was a gain of 7.60 points in the Dow Jones Industrial Average, 11.78 points in the Nasdaq Composite, and 1.08 points in the S&P 500. Top gainers on the session included AA ahead of Tuesday's quarterly results, CAT, DNA, X, NVDA, SHPGY, GOOG and MCD. Some of the largest losers were AMD, PNC, BHI, PWAV, and ESRX. The top sectors were semiconductors, banks, computer hardware and home builders, while the losers included energy, oil services, and gold stocks.

The Nasdaq is fast approaching that resistance from earlier this year that we have been keeping an eye on over the past week. I am still looking at that zone to put the market into a larger correction on the daily charts that we have yet to see over the past two months. So far the 20 day simple moving average has been holding the trend well. The extension away from that moving average is increasing. I would prefer to see some sort of strong momentum move this week to extend it even further before a larger correction because this will give it a better chance for the bulls into next year, as opposed to rounded highs where the market pace slows on the upside and establishes a series of only slightly higher highs.

Economic Reports and Events
Oct. 10: Wholesale Inventories for Aug. (10:00 am), Treasury Budget for Sep. (2:00 pm)
Oct. 11: Crude Inventories 10/06 (10:30 am), FOMC Minutes Sep. 20 (2:00 pm)
Oct. 12: Initial Claims 10/07 (8:30 am), Trade Balance for Aug. (8:30 am), Fed's Beige Book (2:00 pm)
Oct. 13: Export Prices ex-ag, Import Prices ex-oil, Retail Sales, & Retail Sales ex-auto for Sept. (8:30 am), Michigan Sentiment-Prel. for Oct. (9:50 am), Business Inventories for Aug. (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.
Oct. 10: EMMS, AA, CHTT, CMGI, DNA, LPL, SVU
Oct. 11: ACGY, GCI, HST, LRCX, MON, YUM
Oct. 12: COST, GENZ, JRC, MTG, PEP, PII, SWY, WGO
Oct. 13: FNFG, GE, PKX, RF
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.