Good day! The market saw downside momentum increase throughout the past week heading into Friday. This continued into the open on Friday, but the lows held at the 9:45 ET reversal period. This low was only slightly under the previous 15 minute lows in the Nasdaq Composite and Dow Jones Industrial Average. The ideal action for the bears would have been a bit more significant of a lower low to avoid the indices rounding off into support and hence picking up momentum on the upside coming off those lows. It was not quite apparent right away that the indices would not see another stronger move on Friday, but even though the upside waned into the 10:45 ET reversal period, the breakdown into 11:00 was relatively minor. The S&P 500 and Nasdaq both held the previous lows, while the Dow again made only a slightly lower low before turning back around again with the 15 minute 20 simple moving average serving as resistance.

The volume in the market declined dramatically throughout the remainder of the morning and into the early afternoon. This was a great deal more than is normal despite the time of the day and the fact that it was also a Friday. The trading range also narrowed quite a bit and the combination favored a trend move on a late day breakout into the weekend. After about 12:30 ET the bias began to move in favor of the bulls for the breakout. The downside out of the 12:00 ET reversal period was very gradual and the indices overall hugged the upside resistance along the 15 minute 20 simple moving average. At the same time, the volume in the indices dropped to its lightest levels since the daily selloff began.

At about 13:30 ET the range finally gave way and after a little hesitation the momentum increased moving into previous highs on the 15 minute time frame and 5 minute 200 simple moving average resistance. The Dow experienced the strongest afternoon trend move, while the Nasdaq saw the weakest one. The indices performed well ahead of 14:15 ET, but then there was a bit of a disconnect when the Nasdaq began to lag, while the S&Ps and Dow continued to trend higher into the close. The 5 minute 20 sma was support and the S&P 500 and Dow both had nice bull flag formations on the 5 minute charts heading into the 15:00 ET reversal period.

Although the market slowed ahead of the close, the Dow Jones Industrial Averages ($DJI) posted a strong gain of 157.66 points. The S&P 500 ($SPX) gained 16.95 points. The Nasdaq Composite rose 32.16 points. NSM, X, AKAM, INFY and ISIL were among the top gainers. Top losers were NKE, GLD, PCAR, and FRPT were a couple of the top losers that were not saved by the late day rally. The rounded lows on the 30 minute charts and the increase in momentum on Friday afternoon now have the indices favoring more of a range heading into the new week. Last week's highs will be resistance. There is the potential for a 2T with a slightly higher high on the daily charts, but the bulls and the bears are fairly well balanced at this point 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.