Good day! Trading fell nicely in line with my expectations going into the session on Friday. As anticipated, the volume in the market declined significantly ahead of the extended weekend, but we also saw that bounce again off the previous session's lows. As I mentioned on Thursday evening, the momentum into that day's close, combined with the steady selloff left the door open for a correction off those lows for a second day in a row going into Friday morning. Due to the weekend, however, we were only looking at the moves from a daytrading/scalping perspective.

Even with an upside bias on Friday morning, there was not a lot of opportunity intraday. The market gapped higher, right smack into the 15 minute 20 simple moving average resistance, and this took out a large chunk of the potential I was expecting from the session. Following the open the indices fell range-bound and moved sideways with choppy trading until 10:00 ET. At that point they began to move higher once again following April's existing home sales data. The news was bleak for existing home sellers with the supply of homes on the market rising to 15-year highs despite the 16% increase in new home sales reported by the Census Bureau on Thursday. This meant that the total home sales in April fell 0.3%, which is a 12.7% decline over the past year.

The momentum on the upside increased slightly out of 10:30 ET and then popped quickly into mid-day highs from Thursday. This price resistance, coupled with the 10:45 ET correction period, held perfectly and the indices pulled back throughout the remainder of the morning. The momentum on the rally led to a slower correction to begin with going into the 5 minute 20 simple moving average support, but after congesting along that support level on declining volume, the support gave way to stronger selling into noon.

The Dow again displayed some stronger relative weakness on Friday, which has been the case a number of times in recent trading due to its greater daily extension on the upside. Corrective moves in the market will often take the form of two waves of decline before turning back around. In the Dow this second wave of selling closed the morning gap zone. The S&Ps found support at morning lows, while the Nasdaq hit support at its 15 minute 200 sma. All of these levels hit at about 12:30 ET and the market rounded off at this support.







Momentum again increased on the upside coming out of the 13:00 ET correction period as the indices broke higher out of a small Phoenix pattern that formed from the small 1-5 minute base between 12:35-13:00 ET. The break out of this base triggered a long, which was able to return the S&Ps and Dow to the previous breakdown zone and took the Nasdaq back into its morning highs. These price levels helped push the market sideways once again into 13:30 ET. Although this correction broke upwards out of 14:30 ET, there was not enough market participation to create a surge into the close. Nevertheless, the indices still managed to end the session right in the zone of the day's highs. The Dow ($DJI) gained 66.15 points on the day, while the S&P 500 ($SPX) climbed 8.22 points, and the Nasdaq Composite ($COMPX) added 19.27 points. The late day breakout leaves the momentum favoring the bulls on Tuesday morning, although the slowdown in buying in recent weeks will weigh heavily on their minds and can easily lead to a continuation of the rounded highs that have been forming on the daily time frame.

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.