Good morning! The activity in the market picked up considerably on Monday following last week's slow holiday trading. This held well with our expectations heading into the week, but bode poorly for the lingering bulls. The rounding off I talked about yesterday on the larger intraday and daily charts with slowing upside pace gave way to some serious selling to kick off the new week. The setup for the downside began early on with a premarket base at lows in the index futures market. This base broke right away out of the open, but the market pulled back up into the highs of that range in the first 15 minutes of the day before following through more solidly on the bias shortly thereafter.

The early morning selling found some initial support at the 10:15 ET reversal period, but this merely pushed the indices into a bear flag along the lows. The Nasdaq had a tough time containing its bearish sympathies after an article in Barron's over the weekend questioned its current valuation. By the end of the day the stock had lost nearly 4%. A second wave of selling in the overall market began out of the 11:00 ET reversal period. Another 30 minute drop brought the Dow and S&Ps well into their 20 day simple moving averages before correcting again over noon.

This second intraday correction at support took the same form as the first. Two small upside moves within a range gave way to another round of selling at 12:30 ET after coming into the 5 minute 20 simple moving average. The selling pace was beginning to wane a bit at this point. This marked the third selloff intraday and that meant that it would be a lot more difficult to see any strong continuation of the downtrend for the remainder of the day, but the extreme move also negated the chances of a strong recovery and instead favored a choppy remainder to the session.

The market did attempt to move lower after its third correction out of the 13:00 ET reversal period, but the 14:00 move merely retested the prior lows, making no real effort to bust the support zone. This is very typical of a fourth attempt in a trend, which is why it's a riskier trade to try to make. The final two hours were even slower and I gave in to the urge to answer silly web quizzes foisted upon me by my partner. It was at least an entertaining way to wind down the last hour of trading!

By the end of the session, the Dow Jones Ind. Ave. ($DJI) had lost 158.38 points (1.3%), the S&P 500 ($SPX) shed 19 points (1.4%) and the Nasdaq ($COMPX) fell a staggering 54.34 points or 2.2%. Airlines, broker/dealers and networking stocks experienced some of the strongest pressure, which oil and precious metals were again the places with small glimmers of strength. A strong trend day such as Monday's will tend to unwind a bit the next day to show some more back and forth action intraday. It was too much selling to just ignore, however, and I think we will continue to see strong pressure on the bulls as the week continues. A lot of my position trades have been giving me signals to start protecting gains recently and that was particularly the case yesterday.

Economic Reports and Events This Week
Monday: -
Tuesday: Durable Orders for Oct. (8:30 am), Consumer Confidence for Nov. (10:00 am), Existing Home Sales for Oct. (10:00 am)
Wednesday: GDP-Prel. and Chain Deflator-Prel. for Q3 (8:30 am), New Home Sales for Oct. (10:00 am), Crude Inventories 11/24 (10:30 am), Fed's Beige Book (2:00 pm)
Thursday: Initial Claims 11/25 (8:30 am), Personal Income and Spending for Oct. (8:30 am), Chicago PMI for Nov. (10:00 am), Help-Wanted Index for Oct. (10:00 am)
Friday: Auto Sales and Truck Sales for Nov. (12:00 am), Construction Spending for Oct. (10:00 am), ISM Index for Nov. (10:00 am)

Key Earnings Announcements This Week
Monday: DCI
Tuesday: AMWD, JTX, RTLX, SKIL, ARO, DBRN, RSTO, SIGM, and LNUX
Wednesday: DSW, OPSW, TIF, CHS, SNPS, and TIVO
Thursday: DLM, HNZ, MOV, MGAM, SFD, FNSR, HRB, ISLE, MCDTA, OVTI, and UNCA
Friday: KWD, and WMG
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance and Briefing.com. 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.