Good day! The week kicked off on a hesitantly bullish note on Monday. The indices gapped higher into the open with the Dow Jones Ind. Ave. futures opening higher by more than 100 points, aided by the 8:30 am ET better-than-expected retail sales data. This provided that upside action we were watching for as a result of Friday's closing bias, but the larger time frame bias was not as strong and the market fought with teeth and nails to hold onto those gains. As the session played out, this larger time frame's pressure made itself more well known by keeping constant pressure on subsequent attempts for the overall market to move higher throughout the morning.

Right away out of the gate it looked like we were going to be in for a tough session. Out of the momentum players, very few on the upside showed even the slightest promise for great rewards. Those which caught my eye initially as possibilities included BX, ANAD, VCLK, BEAS, SHLD, and TWC. If you happen to go through that list now, however, you will notice that only SHLD even bothered to give a clear-cut buy trigger following its announcement to increase its stock buyback, and it was the only one of these 6 to manage to hold up against the overall market. I did take a stab at BX after it pulled back in the morning, but was flushed out on the bounce with a tiny loss when I let my concerns about the overall market persuade me to step aside. Whoops! Even this "leader", however, closed just off intraday lows and nearly closed its morning gap, at which point it had gained 3% on better-than-expected Q2 earnings. 

 

A much better stance for the day would have been if I had stuck to my statement early on that it would be a much better day for trading the EMini futures than individual stocks.... Double whoops! In that area of the market, things played out rather well throughout the day for daytraders and scalpers, although it's a bit tough to see that on the 5 and 15 minute charts. While the market was stuck in a range for the most part, the moves back and forth were very solid and support and resistance levels held perfectly, allowing for some really nice pivot and continuation moves on the 1-5 minute time frames.

The open in the market placed the indices directly into the path of resistance from Friday's highs with the 15 minute 200 simple moving average intraday not very far off. The indices pulled back a bit off these levels to form a two-wave correction in the Nasdaq on the all-sessions charts going into 10:00 ET. The second pullback was somewhat slower than the first and on some lighter volume, allowing the market to pivot out of 10:00 ET. Due to additional economic data in the form of the June business inventories, this time zone held a lot better than the typical morning reversal periods and the market made its way higher with another two-wave trend heading back into the earlier highs. The similar momentum allowed the highs to hold and the range persisted intraday into the second hour of trading.



After retesting the morning highs, another correction followed without any strong bias as to which direction the indices were planning on breaking. The previous lows held again at support at 11:15 ET and a third pivot high was established shortly thereafter. It was only after this third high in the intraday trend that a larger bias began to form. The larger intraday trend move took place from about 11:30 ET to 13:20 ET when the market pulled off the mid-day highs. An initial drop led to the market hugging the 5 minute 20 simple moving average support. At first I was a bit more bullish, because if the market had hugged that third intraday high into noon, then it would have been possible to break higher. Instead the momentum of the pullback was too rapid and instead of bouncing back into the third high to hold the range at noon, the market created a small Avalanche pattern that allowed the 5 minute 20 sma to break and for the momentum to pick up a bit on the downside.

The early afternoon selling first took the indices into the previous lows and then they began to hug the support into 13:00 ET before breaking down with a third drop on the 5 minute charts into the 13:20 area. Even though I was bearish at this time, the selling was not any stronger than any of the prior back and forth moves throughout the day so far and it nixed the chances for a stronger breakdown, which I had been hoping for to simply bring in some decent moves beyond the scalp time frame. Instead, this comparable momentum meant that the larger range had a better chance of holding into the close.

A three-wave uptrend brought the market back into its upper resistance zone into 14:30 ET or so, after which time the bulls again succumbed to the pressure and fell once more into intraday lows with the 15:00 ET correction period. The momentum in the market began to increase slightly to the downside, but was unable to bust out of the range before the closing bell. It was only afterwards that they finally gave in and the selling continued.



I haven't made up my mind at all regarding Tuesday's upcoming session. I do tend to find that Tuesdays in general offer more opportunities than Mondays, likely because there are more news events to move the market, but I don't have a strong directional bias heading into the session at all. The market is stuck in the middle of a range and the momentum within that range has not yet began to favor one side over the other for a decent breakout. My bias overall is that we experience a larger correction off the support levels of the last couple of weeks, but I am still open to the possibility of those levels being tested one more time, so I am not doing much at all for swingtrading at the moment and have been focusing almost exclusively on intraday activity.

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.