Good morning! The market had a very rough day on Friday. I had gone into the session not really expecting much from it. There wasn't a strong bias as far as direction went on Thursday heading into the next day. The concern expressed earlier in the week was that with light economic data and the end of earnings season, it would leave very little to hold up the market, making it easier for the bears to take hold once given the opportunity. Well, they did just that and they ran with it.

The session did begin with a continuation of indecision, however, following through on that lack of bias from the previous session. The market even climbed initially, but was soon testing strong price resistance from the highs earlier in the week. Right from the start the momentum on this correction was stronger than usual. Typically a substantial upside move in terms of the pace of the move will create a slower correction or pullback. This was a bit stronger this time around and so I figured that it would push the market into a range into noon as a result.

Nice support hit again around 10:45 ET and the market did try to hold the range. The Nasdaq was displaying a lot of relative weakness and had fallen back to the range from Thursday morning, although the Dow and S&Ps found closer support from the previous afternoon. The indices made a slightly lower low into the 11:00 ET reversal period and began to correct over noon. The pace of this correction was very gradual, however, so instead of continuing the range, it instead began to favor further selling. Light volume confirmed the lack of buyers to offset any selling and the support zone gave way into the early afternoon with mid-day highs at the 12:00 reversal zone.







The momentum on the afternoon selling was above average as it picked up into 12:30 ET, but it then increased even more when it broke lower again out of 12:45. The indices fell hard into the 13:00 ET correction period. At that point the S&P 500 was testing Thursday's lows and the Nasdaq had filled the gap from the 7th. The Dow also found support from Thursday afternoon.

The market reacted very little to the strong 15 minute support. Instead of letting go and bouncing, the market began to form a nice 5 minute bear flag. The S&Ps and Dow had not extended themselves like the Nasdaq did into 13:00 and they were able to maintain the momentum of the selling when the support broke into 13:30 ET. The Nasdaq still continued its own decline, just to a lesser degree.

The selloff in the indices became much choppier after 13:00. The market continued to make new lows but began to hug the upper end of the selling channel after hitting support levels on the daily charts. Finally, when the 15:00 ET reversal period hit the bulls found a bit of a reprieve. The market bounced back into the last hour of the day, even though it was still choppier action and failed to break the 14:00 highs.

The market tends to have a difficult time maintaining a move like Friday's into the next trading day. Even when the selling resumes, it's usually much more gradual and hesitant. Since we have seen this happen several times over the past couple of months, however, the odds are becoming higher that it will have a much more difficult time turning back around like it had in the past.

Economic Reports and Events This Week
Monday: -
Tuesday: Treasury Budget for Jan. (2:00 pm)
Wednesday: Trade Balance for Dec. (8:30 am), Retail Sales for Jan. (8:30 am), Business Inventories for Dec. (10:00 am), Crude Inventories 2/9 (10:30 am)
Thursday: Export Prices ex-ag and Import Prices ex-oil for Jan (8:30 am), Initial Claims 2/10 (8:30), NY Empire State Index for Feb. (8:30 am), Net Foreign Purchases for Dec. (9:00 am), Capacity Utilization and Industrial Production for Jan. (9:15 am), Philadelphia Fed for Feb. (12:00 pm)
Friday: Housing Starts and Building Permits for Jan. (8:30 am), PPI and Core PPI for Jan. (8:30 am), Leading Indicators for Jan. (10:00 am), Mich. Sentiment - Prel. for Feb. (10:00 am)

Key Earnings Announcements This Week
Monday: ASF, BRO, CEM, CRK, CTRP, LTR, MEND, NTE, VAL, CEPH, FWRD, HIMX, IRBT, QGEN, RADN, RMKR, SNDA, VECO, and YUM...
Tuesday: EYE, CCE, ENTG, ENZN, KBH, MNTA, NDAQ, OMC, PXR, TEVA, WWE, WYN, MDRX, ANST, AMAT, CCRT, FSLR, FOXH, GPRO, MVSN, NVDA, SPSS, WTW, and XTO...
Wednesday: LEND, KO, DAKT, GRMN, GENZ, JNY, KEA, MGM, ODP, PGN, RIG, ZBRA, BIDU, GES, DISK, NTAP, NTRI, PLAB, RJET, and NCTY...
Thursday: A, BHI, BIIB, BBW, EXPE, FCN, LTM, TAP, ZEUS, POOL, ULBI, AMMD, AQNT, BOBE, BFAM, CAPA, CMG, IM, NANO, NTGR, RADS, and ZGEN...
Friday: ALE, GT, HRL, SJM, SRP, and RNIN.
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. This list is not a complete list of earnings, so always double check your positions!

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.