Good day! The rally that has been in place for the last several months hit a solid road block early Friday morning following the release of premarket economic data from the Commerce Department. At 8:30 am ET the gross domestic product was released. This measures the value of all goods and products produced in the United States and is used as an indicator for the country's economic standing. Friday's report showed an advance of only 1.6% as of the end of the third quarter. This was significantly under the 2.1% increase that many economists were forecasting.

The declining housing market figured prominently in the overall economic slowdown. This quarter was the slowest growth since Q1 of 2003. In Q1 of this year the economy was showing a growth of 5.6%, easing with a Q2 growth rate of 2.6. Despite the waning housing market, consumer spending remained modest, up 3.1% from 2.6% in Q2, while business spending on equipment and software rose dramatically from the prior quarter's loss of 1.4%, gaining 6.4%. Core prices, which reflect inflation and exclude food and energy, are holding strong with a 2.3% increase in Q3.

The morning gap on the news was not really that extreme into the open. The indices opened moderately lower at the 15 minute 20 simple moving average zone, but it was enough of a change in pace after the gradual buying of the prior day to create a lot of hesitation on the part of the bulls. Within the first 15 minutes of the day all three of the major indices were hitting support. The Dow Jones Ind. Ave. was coming into Thursday's lows, the Nasdaq Composite was hitting Thursday's morning highs, and the S&P 500 was hitting congestion from the prior two days as well as the 5 minute 200 sma. All of these helped keep the sellers from continuing to push the market lower, but were not enough after that pace change to bring in a lot of buyers.

Volume began to drop nearly right away out of the open on Friday. The market congested along support with a narrowing trading range, unable to shake the 15 minute 20 sma, throughout more than half of the session. The trading channel narrowed considerably over noon as volume continued to slow and each attempt to break higher was less successful than the last on the 1-2 minute time frames. Finally the market began to hold the lower end of the trading channel starting at about the 13:00 ET reversal period. Shortly thereafter the support gave way to strong selling, quickly taking the Nasdaq to new intraday lows.

Price support from earlier in the session stalled the bears temporarily into 14:00 ET, but a second wave of selling quickly emerged. This brought all three indices to new lows on the day before support hit once again just before the 14:00 ET reversal period. This time the prior lows in the Nasdaq combined with 15 minute 200 sma support in all three of the indices to ease the selling pressure. A third attempt at lows was unable to break free of the 5 minute 20 sma resistance and the market remained congested for the final hour of the day.

As I mentioned heading into the month, October is typically a reversal or correction period for the overall market. Alternately, if the market is in a trading range heading into the month, it can serve as a breakout month. So far the indices have been moving strongly higher ever since this summer's lows and the Nasdaq is at major resistance from the first several months of this year where it was stuck in a trading range. As a result, I continue to remain very leery on new buy setups on the larger daily through monthly time frames. There will always be some exceptions, but I am leaning towards a greater correction in the near future in the overall market whereby it breaks this current trend channel and the 10 and 20 day smas that have been holding it up. I would still prefer an upside flush, however, and we have yet to see that despite the change of pace favoring the downside on the 60 minute charts.

Economic Reports and Events
Oct. 30: Personal Income for Sept. (8:30 am), Personal Spending for Sept. (8:30 am)
Oct. 31: Employment Cost Index Q3 (8:30 am), Chicago PMI for Oct. (10:00 pm), Consumer Confidence for Oct. (10:00 am)
Nov. 1: Auto and Truck Sales for Oct. (12:00 am), Construction Spending for Sep. (10:00 am, ISM Index for Oct. (10:00 am), Crude Inventories 10/27 (10:30 am)
Nov. 2: Initial Claims 10/28 (8:30 am), Productivity-Prel. for Q3 (8:30 am), Factory Orders for Sep. (10:00 am)
Nov. 3: Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek for Oct. (8:30 am), ISM Services for Oct. (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. 30: ADPT, ALO, AMMD, AU, ASH, BEAV, CCU, BVN, CCUR, CVA, ECLP, FPL, GOL, GW, HUM, JKHY, KIM, MET, MSPD, NXG, OIS, RACK, RCII, RTI, SPG, SKYW, STO, SPN, SBL, SYY, PFG, TRI, UDR, VZ, VMC, WRI
Oct. 31: AGR, AL, ACAS, AEP, ADM, ADP, ITU, BIIB, BJS, CCJ, CE, CHTR, CMI, CVTX, DPL, EXP, EK, ETR, EOG, EOP, EQR, IT, HMY, HLX, HLT, IACI, JLL, KSU, LTR, MRO, MLM, MAS, MCK, OII, OCR, ORCT, OSK, PRGO, PNC, PPL, PG, KWK, Q, RDC, RCL, SAFC, SNY, SMI, SGY, JOE, UAUA, UBS, UPL, UARN, URI, X, UTHR, VLO, VSH, VC, VNO
Nov. 1: TFSM, AG, ALXN, AGN, AW, DOX, AOC, WTR, AIZ, ACLS, BIDU, BMRN, CAI, ELY, CAM, CNQ, CBEY, CRDN, CI, CINF, CLX, CNO, DVA, DNR, XRAY, DVN, DIOD, D, BOOM, EDS, ESS, FIC, GRMN, GPRO, GSF, GES, HOC, IDCC, ITRI, KND, KYPH, LVS, MMC, MA, MXIM, MWV, MIL, MYL, NFP, NHP, NLS, NEM, NBL, OGE, OKE, OSUR, PMTC, PKD, PTEN, PGH, PXD, PLXS, PRU, PEG, PWEI, QDEL, H, COL, SWKS, SMSI, STXN, SUN, STKL, SHO, SUPG,  TSRA, SVM, TWX, TRN, UHCO, UNM, VCLK, WRNC, WCG, WYN
Nov. 2: ACOR, AAP, AGU, APCC, ABC, AIV, AQNT, ILA, AVNX, ABX, BDX, BBI, BWNG, CA, CMX, CBS, CNP, CTL, CEPH, CPHD, CEM, CQB, CBB, CMS, COGT, CTSH, CSC, ED, CS, CROX, CVS, ERTS, HLTH, ENCY, ENR, ENTG, ENZN, FBR, GWT, GMST, GLBL, HS, HTCH, HYC, ICOS, INCY, ICE, IFF, IP, IRF, ICGE, MDR, MGM, NKTR, NSTC, NBIX, NSR, NEW, NXL, NI, OSG, PAAS, PDLI, PRFT, PQ, PDC, PWAV, PSA, QCOM, PWR, ROIAK, GOLD, RYI, TSG, SGMS, SRE, SINA, SIX, SFC, STN, SFY, BRLC, TLM, TSYS, TSO, PMI, THE, RIG, UN, UVN, USU, VRX, VPHM, WLT, WEBM, WDC, WLK, WFMI, WMBS
Nov. 3: AEE, DUK, EGO, HPOL, HNT, HRP, KSE, MHS, NRG, OMG, PGN, SRP, TTI, THQI, WR
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.