Good morning! After two strong downtrend days, the market put in the third one we were looking for to kick off the new week. It got off to a pretty choppy start, however, by opening pretty close to the end of day prices on Friday and then falling into a trading range throughout the morning. The opening lows held the range for support while the prior 5 minute pivot highs held as resistance, along with the 15 minute 20 sma.

The pace within the range began to favor the bears once more going into the early afternoon when the upside move out of 11:45 ET occurred at a much slower pace than the prior drop. It also didn't quite make it back to the previous highs and soon rounded off and broke lower just after 12:30 ET. This move continued into the 13:00 ET reversal period which held very well. It hit at the same time as the prior intraday lows in the Dow Jones Ind. Ave. and SP500, although the weaker NASDAQ was able to break that level and put in a new low.

The support from 13:00 ET led to a base along the lows, creating a 5 minute short pattern as the base continued into the 5 minute 20 sma with declining volume. Once it triggered a breakdown, the move fell quickly before once again holding a main afternoon reversal period. This time it was the 14:00 ET one and a volume spike on the 2 minute charts helped to indicate exhaustion. Support also hit at that level in the form of an equal move on the 5 minute charts, which can be seen the most clearly on the 5 minute ES chart.

After so much selling, risk began to increase going into the last two hours of the day. As I mentioned yesterday, few intraday trend moves will go for more than 2.5-3 days before it has to put in a larger intraday correction to at least break the 15 minute 20 sma. As you can see, this resistance level held throughout Monday's session, so we were beginning to come to the end of our typical three day move as well as a great deal of daily moving average support. Even though the market tried to form another base along lows for a 5 minute bear flag, it should have triggered into the 15:00 ET reversal period if it was planning on it. Instead it held and broke above the 5 minute 20 sma resistance, leading to a rally back into the 15 minute 20 sma resistance. This level held into the close.

On Tuesday I am expecting a correction to the selling of the last three trading days. Overall, it should be much more gradual than the trend move on the daily charts was, but intraday we might see some stronger spikes. I will continue to favor daytrades at this point.

Updates: CI triggered on 5/26 with the break of $97.55 and had highs of $107.79. Targets hit and closed with trailing stops. HIG from Monday broke nicely over the $76.50 zone and has highs of $77.52. Support is the 20 day sma. MDRX is still of interest as a swingtrade buy. .

Economic Reports and Events
June 28: Consumer Confidence for Jun (10:00 am)
Jun 29: Chain Deflator-Final for Q1 (8:30 am), GDP-Final for Q1 (8:30 am)
Jun 30: Initial Claims 06/25 (8:30 am), Personal Income for May (8:30 am), Personal Spending for May (8:30 am), Chicago PMI for Jun (10:00 am), Help-Wanted Index for May (10:00 am), FOMC policy announcement (2:15 pm)
July 01: Mich. Sentiment-Rev for Jun (9:45 am), Construction Spending for May (10:00 am), ISM Index for Jun (10:00 am), Auto Sales for Jun (12:00 am), Truck Sales for Jun (12:00 am)
July 04: -
July 05: Factory Orders for May (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 stocks' earnings dates before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
June 28: APOL (B), EMMS (B)
June 29: COMS (A), GIS (B), LGF (A), MERX (A), ORCL (B), RIMM (A)
June 30: BMET (?), CAG (B), STZ (B), EYET (?), MKC (B), PLMO (B), RHAT (A)
July 01: -
July 04: -
July 05: -

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.