Good morning! After Friday's sharp decline, it came as little surprise that the price action slowed down considerably on Monday. Volume remained decent, however, despite the market spending most of the day in a rather narrow trading range. The sellers had returned out of the open with the weakness concentrated in utilities, semiconductors, oil, metals, and investment trusts. The indices found support fairly early on between 9:45 and 10:00 ET. The Nasdaq pushed under Friday's lows although the Dow and S&P 500 held those lows.

After the selling slowed the market was unable to regain significant upside momentum and held the 5 minute 20 sma resistance zone. Volume dried up as the afternoon progressed and the range narrowed. While the momentum was slightly more bullish in range into the early afternoon, from 13:00 ET to 13:45 ET they turned over, with the market beginning to hug the lower end of the congestion before falling into 14:00 ET into new lows on the day.

The afternoon selloff was fairly demure. Even though the indices continued into new lows at 14:30 ET, they were only a few ticks under the day's lows. These simply trapped any late-arriving bears and the indices turned back around in the final 90 minutes of the day. The mid-day trading zone held as resistance and the market moved sideways in a narrow range into the close.







The indices have more room to head lower as the week progresses. In the past couple of weeks it would have held Monday's lows and pulled back into the upper end of the trading channel, but the more often this happens, the more difficult it becomes the next time. As a result, I am not as hopeful for the same type of price reversal again this time despite the rounding off into the lows as the week begins. The next support is going to be the 20 day simple moving averages again the S&P 500 and Dow Jones Ind. Ave. and the 100 day sma in the Nasdaq Composite. These should hit around the same time as more of the congestion from a couple of weeks ago hits.

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.