Good day! The market continued to head lower as the week wound to a close on Friday. Once again the 8:30 ET economic data provided some early action on the day. This time it helped gap the market higher into the open. The unemployment rate dropped to 4.4%, the lowest level in more than 5 years, although fewer jobs were created in October than anticipated. The indices have been having a tough time holding onto the early morning gaps. On Friday, it once again began to fill early on. The 10:00 ET ISM nonmanufacturing index did little to sway the returning bears. The index rose to 57.1% from its previous level of 52.9% in September, but while this was more than was forecast, it was positive news for those closely following inflation indicators.

The indices fell into a trading range along the 5 minute 20 simple moving average support levels and then broke lower for a second wave of selling out of the 10:15 ET reversal period. This served to widen the range from the prior day and took the S&P 500 and Dow Jones Industrial Average into their 15 minute 20 sma support levels. Due to the greater momentum on the selling, the market was able to form one more continuation pattern similar to the first. It broke lower after the 11:00 ET reversal period and marked the third consecutive wave of downside following the open. This is typically followed by a larger correction period than between the prior three waves of selling. The rule held on Friday, allowing the market to base into the 5 minute 20 sma before flushing a final time into 13:00 ET and then reversing the trend into the afternoon.

The remainder of the session was again fairly choppy. The 5 minute 20 sma resistance broke coming out of the that 13:00 ET reversal period, then the indices promptly fell into a range along the moving average. This created a buy setup out of 14:00 ET, but this only took the indices back into the congestion zone from the prior day and that resistance again pushed the them into a range for the final 90 minutes of the day. By the end of the session, the Nasdaq Composite closely slightly lower by 3.23 points, the Dow Jones Ind. Ave. lost 32.50 points and the S&P 500 lost 3.04 points. The weakest sectors on the day were restaurants, home construction, health care, and software. WFMI was one of the biggest losers, falling 23.10%  after earnings. ERTS, on the other hand, was one of the strongest stocks on the day after its own earnings propelled it higher by 11.80%.

Although the trading on Friday did open up the range as compared to the prior day, it was still a more difficult session with greater chop after the first two hours. Given that the market is trying to finally correct from the prior several months of buying, however, this type of action is not that unusual. The upside was strong enough that the bears are hesitant to come out and show themselves in full force out of the fear that this correction may be short-lived. I don't think that will be the case. If you check out the weekly chart of the QQQQ, you will see that the index is at a very significant resistance zone, which is the one we first started watching for back around August. The slowdown over the last two weeks is the initial reaction to that price level.

I am anticipating that we continue to see corrective action in the market over the next couple of months. Most of the stocks that have been running recently are showing a lot of exhaustion and overhead resistance. As a result, they are going to need some time to catch their breath. As discussed in recent weeks, I've been having a more difficult time finding decent patterns on the larger weekly and monthly charts for position trading. Instead, I've been using the past two weeks to protect a lot of the gains on my longer term positions. My focus this week will remain on the shorter time frames, primarily following the intraday action for daytrades.

Economic Reports and Events
Nov. 6: -
Nov. 7: Consumer Credit for Sept. (3:00 pm)
Nov. 8: Crude Inventories 11/03 (10:30 am)
Nov. 9: Export Prices ex-ag. and Import Prices ex-oil for Oct. (8:30 am), Initial Claims 11/04 (8:30 am), Trade Balance for Sep. (8:30 am), Wholesale Inventories for Sep. (10:00 am)
Nov. 10: -

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.
Nov. 6: LEND, ATVI, AES, ALTR, APC, AINV, BBD, BKHM, CDE, CCRT, DCEL, EP, FRT, FLR, GGP, GSS, GSP, HELX, HIMX, INAP, LINTA, MVL, NNN, NTES, OSIP, PNK, RNWK, O, SBAC, SONS, BEE, ELOS, TELK, XMSR
Nov. 7:  APC, BZH, DISH, FTO, HW, HOLX, KOPN, NOOF, OPTN, PLMD, REDF, TEVA, OATS, BBBB, CECO, CRAY, JCOM, SAPE, TWTC, TRLG, WYNN and UBET
Nov. 8:  ARTX, BRL, CVC, DEPO, DTV, FD, HGSI, DISK, SIRI, TRMA, BORL, CELL, CSCO, ERES, CELL, JUPM, IPAR, SLNK, OVEN, and ZIPR
Nov. 9:  BIVN, CNTY, FLO, GIGM, HANS, IMAX, MRGE, TXU, URBN, JOBS, COGO, ECLG, DIET, EXPE, KSS, SNDA, and DIS
Nov. 10: SIL, ERF, HEW, IAG, PBR, CXW
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.