Good day! The market had a very strong session on Monday to begin the new week of trading. The indices quickly added that upside momentum that we needed early on in the day to propel it higher and the Nasdaq Composite established an equal move as compared to Thursday's rally by the time the 9:45 ET reversal period hit. By the end of the day the Dow Jones Industrial Average had added more than 100 points (108.33 to be exact), the S&P 500 rose 15.62 points, and the Nasdaq Composite had gained 26.39 points. The three strongest sectors were the broker/dealers, broad financials, and the banks.

After running into resistance shortly after the open, I was a bit more hesitant to be aggressive on the upside right away as a result of the larger moves that were now in on the indices, but the market managed to hold onto the highs, favoring a continuation of that momentum. The first one took place coming out of 10:30 ET and led to new highs on the S&P 500 and Dow Jones. The Nasdaq had pulled in a bit more off the morning highs, however, and were merely able to retest them at 10:50 ET.

A 5 minute equal move on the S&Ps and Dow and the prior highs on the Nasdaq led to a second correction intraday. Once again, the reaction off the highs was minimal. Volume declined quite a bit as the indices hugged the highs of the day and showed promise for a third move higher to complete the intraday uptrend. After putting in another correction whose time development mimicked the first, lasting around 45 minutes or so, all three indices again made new highs on the month, managing a measured move as compared to the previous rally. The Nasdaq closed February's gap and the S&Ps hit February's highs on the move.







As we saw a great deal in recent trading, after three moves with corrections of equal measure in terms of time development, the market likes to establish a longer correction. Since the momentum was so strong on that last leg up, however, the correction took over an hour to take back the gains that had been made in only 20 minutes of upside. Even then, the market found support at the breakout zone from the previous move and did not truly reclaim all of the gains before bouncing a bit out of the 13:00 ET correction period. A second wave of correction then managed to take back most of the remainder of that late morning gain and brought the indices into their 15 minute 20 simple moving averages. Another reversal period held here also, at the 14:00 ET zone. The market moved slowly higher off the price support and correction period, making its way back to the prior highs on the 5 minute charts, which halted the move into the close.

The market still has some room to move before it hits the upper levels of resistance from February. This means nice potential still for more buying on Tuesday, but as the Dow and Nasdaq come into those previous highs I'll be starting to watch for mid-day reversals, most likely with some rounded highs intraday where the market starts having a more difficult time breaking prior highs on a 5 minute time frame, thus trapping bulls. This type of correction seems most plausible to me at this time because I'm seeing a lot of bullish bias in the overall market, so I don't think traders are going to want to give up too easily to start with, but can then become more susceptible to brief panic.

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.