Good morning! It was another slow Monday yesterday with no economic data to move the indices and little news otherwise. After a small downside move at the open the market popped to move over Friday's highs, but the extended intraday trend had a difficult time sustaining the momentum and the market soon pulled back in. The first main support came at the opening lows and the 5 minute 200 simple moving average. A very slightly lower low in the indices created a 2B reversal pattern that reversed the move out of 10:30 ET and eventually led to a return to the morning highs around noon.

When the market turned around off the morning lows, I was initially anticipating a triangle formation in the indices. The more rapid back and forth momentum from highs to lows and then back meant that the morning highs would serve as strong resistance mid-day. This was true initially when that level hit, but instead of pulling back well, the indices formed a 5 minute bull flag into 12:30 ET. The slower volume on the pullback, combined with the 5 minute 20 sma support, allowed the market to break through the prior highs and took the Nasdaq solidly into its 15 minute 200 sma resistance around 13:30 ET. This was also Thursday's highs in the Dow and nearly those highs in the S&P 500. The result was a significant intraday resistance level and even though the selling was not too strong to start with into 14:00 ET, the reversal off the highs held and I was able to catch that first reversal fairly easily. The Dow and S&Ps chopped lower for a bit, but the Nasdaq had a strong three-wave decline into the close with an Avalanche pattern beginning the continuation at 14:30ish ET and a bear flag/triangle on the 5 minute chart going into the last half hour of trading.

Even though the market managed to move higher throughout much of Monday's session, the day as a whole simply did not have the same type of excitement as Thursday's session and we had to again take things a little bit slower. We should start to see some more interest come in once warnings season beginning for the second quarter earnings. On Monday though, the Dow ($DJI) only gained about half a point, while the S&P 500 ($SPX) gained 1.45 points and the Nasdaq Composite ($COMPX) lost 1.39 points. Luckily for the bulls there were still a lot of stocks that outperformed, such as FNM, PBR, NE, PTU, INFY and MNKD. Many of the top gainers included the oil companies and metal miners, which seemed to defy the slower intraday action of the market as a whole. Other commodities such as utilities and broker dealers also held up quite well. So far we are still seeing favor for a range/triangle to form on the daily index charts, but the best ones would let the 10 and 20 day simple moving averages break by a bit with the previous daily highs as resistance.







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.