Good day! Despite selling off strongly on Thursday, the market held with its recent bias towards recovering at least some of the lost ground into the next trading day. The S&P 500 ($SPX) rose 14.38 points, while the Dow Jones Industrial Average ($DJI) climbed 111.09 points and the Nasdaq Composite ($COMPX) added 28.48 points. The market initially began to move higher following the 8:30 ET producer price index for finished goods, which rose 0.7% in April. Excluding food and energy goods, wholesale prices remained unchanged. At the same time news of April's retail sales also came out, showing a decline of 0.2%. This was weaker than expected and it's expected that consumer spending will continue to slow throughout the second quarter.

Following the open the market became range-bound, trading without much directional bias until 10:00 ET. After bouncing off the 5 minute 20 simple moving average support, however, the activity began to increase. The Dow and S&P were the first to make it to new intraday highs, but the tech stocks soon took over and propelled the Nasdaq higher as well. Strong volume confirmed the move and the indices remained bullish into the 11:00 ET reversal period. At that point they ran headlong into price and moving average resistance levels on the 5 and 15 minute charts. The 200 sma on both time frames, as well as the price over the previous several days of trading, put a halt to the buying right as the reversal period was hitting. At that point the momentum dried up and the indices fell into a narrowing trading range over mid-day.

As the day wore on, the volume in the market dried up quite a bit and was on par with the pre-Fed volume from Wednesday. It seemed that market participants were a little bit leery of establishing new longs ahead of the weekend even though the intraday momentum at that point was favoring an upside breakout due to the more solid upside swings as compared to the pullbacks within the range itself. When the 15 minute 20 sma hit, however, that was a solid enough support level to allow a few brave souls to creep back in. The best opportunity came shortly after the 15:00 ET reversal period. By that point the indices had established a two-wave correction on the 15 minute charts into the 20 sma support and the momentum confirmed an upside bias by popping more quickly out of 14:30 ET than it had on the prior downside move out of 13:30 ET. It had then based on the 1-5 minute time frame along the upper trend channel, triggering a strong buy setup when that smaller 1-5 minute trend line broke higher around 15:10 ET. The momentum coming out of this range was not exceptional, but still leaves room for the indices to climb back into last Wednesday's highs with very little resistance barring any news that may sway it on Monday.







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.