Good day! The index futures moved strongly higher into Monday's trading following Friday's jobs data, but after closing the gap from the end of February, they had a very difficult time holding onto those gains going into the opening bell. All three indices gapped higher, but were down from their premarket highs as the regular trading session began. The market formed one wave of selling prior to the open and a second, strong downside move took hold right at the bell, quickly closing the gap in the Nasdaq Composite and falling into the 5 minute 20 sma in the S&P 500 and Dow Jones Industrial Average.

After correcting briefly off support, the market gave way to a third and final downside move into the 10:15 ET correction period. Volume spiked somewhat at the lows. Given that each wave of downside was stronger than the last, the odds were decent that the market would have a more difficult time regaining its losses than it had establishing them in the first place. Often the market will even round off at the lows following the final wave of exhaustion as opposed to pivoting quickly off them. This time, however, the bulls did manage a rather quick turnaround, and even though the overall pace still remained more gradual on the new uptrend, there were some strong surges mid-day from the more scalpish perspective. The first of these was a Phoenix buy setup coming out of the 10:45 ET correction period, breaking higher into 11:00 ET and taking the S&P 500 back to the intraday highs.

The S&Ps and Dow became rather choppy over noon on Monday, threatening to reverse the mid-day rally, but the Nasdaq remained stronger, basing solidly along the price resistance that had led to the final morning drop at 10:00 ET. Even though I thought it would try to get going out of the 12:00 ET correction period, it took until the 12:30 ET one for the volume to start to pick up again and the index to break higher after some of the lightest volume trading in the last couple of months over lunch. The breakout was a strong one, establishing an equal move as compared to the move out of the Phoenix at 10:45 ET. I was hoping for a second continuation to mirror the late morning ascent, but it was not meant to be. The market pulled back too strongly from the highs at 13:00 ET and this change of pace made it difficult for the bulls to take control again without a larger intraday correction.

The 5 minute 20 sma served as support initially on the correction from early afternoon highs, but once those gave way the selling pressure increased, returning to Thursday's closing prices in the S&P 500 and the Phoenix congestion in the Nasdaq and Dow Jones Ind. Ave. The support hit the with 14:00 ET correction period and the market rounded off, climbing higher at a choppier pace until the last 15 minutes of the day when the indices made it back into the earlier breakdown congestion around 13:30 ET and then broke the uptrend to selloff into the close. The Nasdaq led the decline, hitting the 5 minute 200 sma right into the closing bell.







After all the back and forth action, the Dow Jones Ind. Ave. ($DJI) closed higher by a mere 8.94 points, while the S&P 500 ($SPX) could not even add a point and the Nasdaq Composite ($COMPX) lost 2.16 points. Going into Tuesday, the market is more bearish as the indices appear likely to continue to correct from the zone of February's gap and the slowing pace on the upside on the 60 minute charts.

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.