Good morning! The markets had their lightest volume since before last month's sharp selloff on Friday. It was a strong week of gains in the indices, in which the Dow ($DJI) rose 3.1% on the week and the S&P 500 ($SPX) climbed 3.6% on the week, while the Nasdaq ($COMPX) added 3.2%. Most of these were established following Wednesday's Fed rates announcement, however, and the market has been rather stagnant as a whole since then. Friday's gains in the Dow amounted to 19.87 points (+0.2%) and 1.57 points in the S&P 500 (+0.1%). The Nasdaq again lagged these two, coming in at a loss of 2.81 points (-0.1%) by the end of the session.

The market started out nearly flat on the day on Friday, but at 10:00 ET the existing home sales data came out, showing an unexpected increase of 3.9% in February when a decline had been anticipated. This created a very short-lived spike in the market, but the fact that foreclosures were on the rise did not escape the notice of most market participants and by 10:30 ET the market was back to pre-data trading levels. After the momentum increased heading back into that price support zone, the market was unable to regain any of the brief strength from earlier and the indices only crept higher into lunch while volume continued to drop off.

The market had very little luck trying to establish any strong bias into the afternoon, and while many Friday afternoons are often slow, this one was particularly so. The momentum didn't turn over intraday. Instead the uptrend channel from 10:30 ET and into 12:15 ET or so broke with very little change in pace. The Nasdaq did pull back up and hugged the lower trend channel and that helped create a more bearish bias into the afternoon, but the moves were highly scalpish in the indices themselves. Some individual stocks like FFIV and EBAY did have some nice short setups as daytrades though. They fell and the indices dropped further on a bear flag out of 14:00 on the 5 minute charts. Support hit quickly at previous lows in the S&P 500 and the 5 minute 300 sma in the Nasdaq. The downtrend channel intraday then broke higher, again without much of a pattern setup to lead the way. The range from this last intraday downtrend held for the remainder of the session.







After last week's move, the market now has a lot of resistance on the daily time frame from the gap on the 27th and just shy of the highs from last month. Since the rally was so strong, however, increasing after rounding off at lows over the last couple of weeks, a larger trading range on the weekly charts is likely to form. The 20 month simple moving average is going to be support as the correction off February's highs continues.

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.