Good day! Following last week's unenthusiastic close, leading the indices with little bias heading into the new week, the market again had a difficult time establishing a strong intraday bias. The indices gapped lower by a decent amount right into support from the lows of the previous two trading days. As with most of the larger market gaps, this one filled. The Nasdaq again showed the greatest strength out of the open, although the S&P 500 managed well also. The Dow continued to underperform as it had for the previous several days as a response to its greater daily extension on the upside overall.

All three of the major indices ran into resistance at about the same time, corresponding to the 10:15 ET correction period. They held and fell off that level into about 10:45 ET, at which point they once again found support on the 15 minute time frames as well as some intraday moving average support in the S&P 500 at its 5 minute 200 sma. Things became a bit tricky by this time, however, because the volume in the market, which had been lighter than average out of the gate, was continuing to wane. I had very little bias by this point because I had found it difficult throughout the first hour of trading to even locate stocks with strong momentum intraday that were forming decent continuation or reversal patterns. I had a feeling by this time that I should just call it a day and go find something more productive to do even though I ended up sticking around anyway...

The market managed to somehow move back into its upper trend channel resistance by the early afternoon, but fell back again into 13:15 ET. This constant change in bias on a 5 minute time frame left the door open for a move either way into the close. I began to initially favor the downside with AMLN as my top shorting candidate, but even though this broke down nicely, the overall market held up well and when the indices did not break down out of a bear flag after 14:00 ET it again changed the market bias to a move higher into the close. This began out of 14:30 ET and GS caught my attention at the time with a nice 5 minute Phoenix breakout at 15:00 ET.

The indices followed through as well but they remained choppy and held the larger 30 minute range and congestion that I had warned of several days ago. The slightly higher high made on Friday within this range still remains a risk, however, that the momentum can increase on a downside move this week, even though the daily charts as a whole still have room to move higher. I am basically taking things on a day-to-day basis as a result since there is not a lot to move the market at this time now that earnings season has passed and summer is under way.

It should be noted that I do not subscribe to the belief that summer trading is any more difficult than the rest of the year, but rather that people's lifestyle changes in the summer can make it more difficult for many individuals. These include kids home on break, interruptions due to vacations, and even just the greater chance of being distracted by the nice weather. The periods between earnings and warnings season, however, can have many days such as this, but that is something which happens on a quarterly basis and is not limited to the summer at all.







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.