Good morning! The market continued to round off at highs on the daily charts on Friday, opening with a bit of upside for the first 20 minutes or so of the day. It was a gradual enough move that it created a 15 minute Avalanche pattern in the NASDAQ Composite by hugging the 20 sma. The short pattern triggered going into 10:00 ET and led to a sharp move back into the lows of the prior afternoon in the NASDAQ and Dow Jones Ind. Ave. and took the SP500 back to opening levels. Due to the rapid downside pace on fairly light volume, it seemed likely that more selling would follow and I began to watch for an Avalanche formation on the 5 minute charts, looking for a base near intraday lows on even lighter volume.

The breakdown occurred much more quickly than I was expecting, making the initial move rather brief and leading to another base for a few minutes before the selling was able to pick up again and drop sharply into the 10:45 ET reversal period. An equal move on the 5 and 15 minute NASDAQ charts and an increase in volume held the indices up as the SP500 also hit its trend channel support from the prior several days.

Due to the pace of the selloff, a more gradual correction over lunch was most probable. The SP500 and Dow had the best reaction in terms of price off the support and the market bounced back to the 5 minute 20 sma resistance before falling into a larger range over noon. I figured the base would take the indices into their 15 minute 20 sma resistance before breaking lower, but, like the morning action on the 5 minute charts, the 15 minute charts also broke earlier than usual around 12:30 ET.

Once again the result was only a slightly lower low before the market had to rest again. This time, however, when the indices pulled back up into the basing zone, the pivot off the resistance was not as decisive. The NASDAQ held the 15 minute 20 sma well and remained bearish, but the SP500 and Dow both fell into more choppy action, cutting off the downside follow though and creating more of a reversal pattern since the overall affect was a more gradual move along 5 minute resistance.

The NASDAQ did manage to have its say, putting in a slightly lower low into the 14:30 ET reversal period and the prior day's lows, but the move was not nearly as significant as a typical Bear Flag on a 15 minute chart would usually be. The SP500 and Dow simply would not give up as easily and the 5 minute bullish patterns they were forming while the NASDAQ dropped triggered very rapidly out of the 14:30 ET lows. The SP500 was very quickly at new intraday highs and the Dow also managed to put in new ones on the day, although the NASDAQ still remained the laggard to the end.

I found Friday's session to be a bit more tricky to trade due to the higher number of premature setups that then created more erratic follow through. The afternoon divergence also made things a bit more difficult. I had taken the Dow short for instance at about 13:40 ET instead of the NASDAQ and had to treat it quite aggressively in order to pull out some gains before it reversed. It is always more ideal to have the three indices line up with the same bias, but ahead of time you can't always tell. In the case of Friday's action, it was only after the SP500 and Dow had difficulty reacting to the resistance by the 14:00 ET reversal period that it seemed likely that the market would turn around and try to move back higher instead. The SP500 had been a bit more bullish on the 15 minute charts, but I had been giving the NASDAQ more weight since it had been forming the more clear cut pattern.

I still don't have a lot that I am looking at from a swing perspective. VAR from Wednesday is still looking nicely on the weekly charts and I'm holding that. I will also be watching PX and BCO for swingtrade buying opportunities early this week. Intraday it looks like we are going to see the choppiness continue for a few more days. We have a lot of economic data coming out this week and with earnings season in full swing, both of those factors are going to be influencing the market each morning and making action from one day to the next less predictable ahead of time.

Economic Reports and Events
July 25: Existing Home Sales for Jun (10:00 am)
July 26: Consumer Confidence for July (10:00 am)
July 27: Durable Orders for Jun (8:30 am), New Home Sales for Jun (10:00 am), Fed's Beige Book (2:00 pm)
July 28: Initial Claims 07/23 (8:30 am), Help-Wanted Index for Jun (10:00 am)
July 29: Chain Deflator-Adv. For Q2 (8:30 am), Employment Cost Index for Q2 (8:30 am), GDP-Adv. For Q2 (8:30 am), Mich Sentiment-Rev. for July (9:45 am), Chicago PMI for July (10:00 am)
Aug 01: Construction Spending for Jun (10:00 am), ISM Index For July (10:00 am)
Aug 02: Personal Income for Jun (8:30 am), Personal Spending for Jun (8:30 am), Factory Orders for Jun (10:00 am), Auto Sales for July (12:00 am), Truck Sales for July (12:00 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
July 25: ACE (A), ALTR (4:15 pm ET), APCC (A), ACI (B), ASH (B), AV (A), AVP (?), BLS (08:00 am ET), CD (A), CNET (A), DST (A), ECL (B), LNCR (?), MVK (A), NFLX (A), OMM (A), ONNN (A), PBI (4:00 pm ET), PCL (?), PLAY (A), DGX (B), SII (B), TXN (A), TRI (B), VRSO (A), XRX (B), AFL (A), AGR (?), AAI (B), AKS (B), AKAM (A), AW (A), AMZN (A), ATML (A), ADP (B), BIIB (A), BSTE (A), BJS (B), BDK (B), BYD (?), BP (02:00 am ET), BNI (B), CTX (A), CME (B), CB (A), CTXS (A), GLW (A), CFC (?), DD (B), ELNK (B), ERTS (A), ESV (?), FLEX (A), HMA (B), IMCL (?), N (B), INSP (a), ISSI (?), IP (B), LLL (B), LAB (B), LCAV (B), LXK (B), LLTC (?), LMT (B), MHS (B), MCHP (A), NWAC (B), PKI (A), PNM 8A), PPP (?), RFMD (A), SWY (?), SANM (A), SEBL (A), SGTL (A), SSTI (A), SSCC (B), SO (B), SWN (A), HOT (B), STM (A), STK (?), SUNW (?), TMX (A), MHP (B), TMO (A), TDW (B), TSM (08:00 am ET), X (?), VLO (?), WOOF (A), VZ (B), WAT (B), ZRAN (?)
July 27: APD (B), ACL (A), ATI (B), AGN (B), AHC (B), AMKR (?), BUD (?), APPB (A), AMCC (A), ARRS (A), ARW (?); ACLS (5:00 pm ET), BOL (B), BEAV (B), BC (B), CDN (A), CHIR (?), CLF (A), COGT (A), CL (?), CA (?), CNXT (?), COP (B), CSX (?), DO (B), DRIV (A), DRE (A9, ETS (A), EOG (B), EQR (B), ERES (A), XIDE (?), ESRX (A), EYET (A), FNF (B), FLYI (?), GBN (A), GRMN (B), GW (?), HRS (A), HCA (?), HP (B), HLT (?), IDTI (4:30 pm ET), ISSX (A), K (B), KOMG (B), LPNT (A), LIZ (B), LPX (?), LSI (A), MSO (B), MXO (B), MCK (40:00 pm ET), MWV (B), WFR (A), MCRL (A), MNST (B), NFX (B), NEM (?), NSC (B), OSIP (A), PDG (A), PLUG (B), PX (B), PHM (A), STR (A), RSG (?), RAI (?), ROK (B), RCL (B), FON (B), SBUX (A), SU (B), TROW (?), TE (A), TK (A), TIN (B), BA (B), MOS (B),TMO (B), TRID (A), UPL (?), UMC (08:00 am ET), VAR (A), VTR (A), VRTX (A), WLT (?), WPI (A), WLP (06:00 am ET), WSH (A), XEL (B), XL (A), ZBRA (B), ZMH (A)
July 28: ATVI (A), ADPT (?), AET (B), ALA (B), AYE (B), AEE (B), AMX (A), AXL (B), AFR (B), AMT (B), ANDW (B), ADRX (A), AU (?), APA (B), AZN (06:00 am ET), AN (B), BLL (B), ABX (4:00 pm ET), BZH (B), BOW (B), BMY (?), BG (B), BR (A), BOBJ (A), CCJ (A), CDX (A), CELG (B), CTL (B), CEM (A), CIN (B), CCE (B), CTSH (B), CYH (A), CNX (B), CYTC (B), DENN (A), DHB (A), DTE (A), EMN (A), ELN (B), ECA (?), XOM (?), BEN (B), FMT (B), GTW (A), GMR (B), GNW (A), GGC (A), GP (B), GSK (07:00 am ET), GR (?), GRP (B), HC (B), HPC (B), IM (A), IRF (A), IVGN (A), JNS (B), JAH (B), JNY (B), KGC (A), KLAC (A), KLIC (B), LQI (B), LEXR (A), LOOK (A), LYO (B), MRO (B), MVL (B), MEE (A), MFE (?), MERQ (A), MET (A), MGM (B), MUSE (?), MSCC (A), MSTR (?), TUNE (4:00 pm ET), MLNM (B), NBR (B), NTGR (A), NWL (B), NXTP (B), NI (B), NOC (?), OLN (A), PHS (B), PAAS (B), PRX (B), PTEN (B), PENN (07:00 am ET), PKZ (09:00 am ET), PD (B), PWAV (A), PDS (B), PCO (B), PDE (A), PGN (B), PLD (B), QLTI (B), RTN (B), RGC (B), R (?), TSG (?), SAPE (A), SGI (?), SPIL (A), SPG (B), SOHU (?), STA (B), SYMC (?), SYNA (A), TLM (B), TNE (B), TERN (A), TRA (B), DOW (?), NDAQ (A), VSEA (A), WLP (?), WMI (B), WFT (B), WEBX (A), WEN (?), WDC (A), WFMI (A), XMSR (?), YELL (A)

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.