Good morning! Last week's shortened trading week was a very choppy one. A heavy smattering of economic data and the beginning of earnings season pulled the indices in both directions, essentially rendering the market at a draw with a bit of a bearish bias. The tech sector weighed heavily on the Nasdaq, thanks to disappointing news from the likes of Apple Computer Inc. (AAPL) and International Business Machines Corp. (IBM). The rest of the market simply got stuck in a range, despite strong volume.

The oil and energy sector continued to correct a bit from the recent selling, moving gradually higher than the overall market, which felt pressure from above. Both the Dow Jones Industrial Average ($DJI) and the Nasdaq Composite ($COMPX) gapped slightly lower, while the oil and energy-laden S&P 500 ($SPX) opened with very little change since Thursday's close. The gap in the Dow and Nasdaq didn't last long, however, quickly pulling higher within the first 15 minutes of the day to fill the gap. That gap level held as resistance, pushing the market back down into 10:00 ET when the Michigan Sentiment data was released.

Trading was choppy in the immediate aftermath of the University of Michigan's consumer confidence report, showing a jump to 3-year highs. Just before 10:30 ET the indices began to smooth out a bit, moving back to the higher levels of the intraday range before breaking strongly through them into 10:45 ET. All three of the major indices made their way back into the price resistance from the mid-day trading on Thursday. The Nasdaq hit the lower end of that lunch-time range, but the stronger S&Ps and Dow were able to pull into the upper end of that trading range for price resistance before reacting strongly off those levels with the 11:00 ET reversal period. 

The market initially turned over slowly at the highs, forming a 2T in the Nasdaq by attempting a higher high and only managing it by a hair. This allowed it to begin to reverse more quickly that on the S&Ps and Dow, although they still sold off steadily. After a brief stall in the selling at the end of the morning, the downside resumed into the 12:00 ET reversal period.

The market held the morning lows and the momentum began to turn once more into the early afternoon. A slightly lower low created a 2B reversal shortly after 12:30 ET. This type of double bottom is just the 2T pattern, but at lows. This helped turn the momentum over to allow for a stronger initial upside bounce off the lows. The momentum slowed in the S&Ps and Dow, however, after about 13:15. The Nasdaq stalled at this time as well, but after the indices formed a continuation pattern by falling into a range at that time, the Nasdaq again broke more quickly higher. The S&Ps and Dow only popped for a minute before they returned to choppy trading. That chop remained in play until the end of the day.

Earnings will again be in focus this week. The first half of the week is relatively light on the economic data front, but YHOO on Tuesday and EBAY on Wednesday are just a couple of the top names that will catch the market's eye. MSFT earnings come out on Thursday. The result of this will mean that volatility will remain a concern. As with last week, there will still be a lot of individual stocks offering some great setups, but the indices will continue to hold greater risk.

Economic Reports and Events This Week
Monday: Leading Indicators for Dec. (10:00 am)
Tuesday: -
Wednesday: Crude Inventories 1/19 (10:30 am)
Thursday: Initial Claims 1/19 (8:30 am), Existing Homes Sales and Help-Wanted Index for Dec. (10:00 am)
Friday: Durable Orders for Dec. (8:30 am), New Home Sales for Dec. (10:00 am)

Key Earnings Announcements This Week
Monday: AXP, BKUNA, CBSS, CSX, RDY, ETN, TXN
Tuesday: ADTN, AMD, AKS, AV, BAC, EAT, BNI, CNI, CTX, CTXS, COH, DHI, DD, EMC, EXPW, HYST, IDTI, JNJ, PTV, PNC, PCP, QI, QLGC, RDN, STX, STM, SUNW, SUPX, TLAB, UAUA, UTX, WB, XRX, YHOO, ZION
Wednesday: ABT, APD, ATI, ACF, ABC, ARBA, ABFS, ASH, CHKP, COP, CVG, GLW, CBST, EBAY, EXC, FFIV, FIC, FDC, GD, HXL, HCBK, ISIL, KNX, LSI, MKC, MCD, MEOH, MGI, NFLX, NETL, NYB, NSC, NVLS, PMTC, PLXS, PLCM, PX, QCOM, RMBS, RYL, SAP, SSTI, SSCC, STLD, SWFT, SYMC, TCB, TER, TXT, TDW, TRID, UIS, VAR, WAT, WLP
Thursday: AGR, AHM, AMP, AMGN, ABI, T, AVT, AVCT, BAX, BZH, BEBE, BDX, BJS, BMY, BC, CCBL, BCR, CAH, CHIC, CPWR, CNXT, CNX, CBE, CY, DHR, ELX, FMD, FNFG, F, BEN, HIG, IMCL, NDE, INFA, IRF, JNS, KEM, KMB, KLIC, LSCC, LEA, LEG, LMT, LYO, MEE, MBI, MCK, WFR, MESA, MSCC, MSFT, NCR, NE, NOK, NOC, NUE, OXY, PMCS, PII, DGX, RHI, COL, ROH, SHW, SWKS, SO, STJ, SYK, SU, SPWR, SY, SYNA, TSM, TPX, DOW, MHP, PTRY, SYK, UNP, UST, WDC, ZHNE
Friday: AAI, CRS, CAT, CDWC, FO, FPL, HON, HCR
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.