The indices were riding a bit of a roller coaster in Monday's session. The market gapped strongly higher to begin the day, but this open was smack into price and moving average resistance. The S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI) both opened into the mid-day price levels from the previous session, while the Nasdaq Composite ($COMPX) hit Friday's highs and the 5-minute 200 simple moving average into the open.

Within just a couple of minutes of the open the bulls found themselves under pressure. The gap closed quickly, but the market only bounced for about 15 minutes when support hit at 10:15 ET. By 10:30 ET the bears had again taken over. This second drop continued into 10:45 ET, where once again the market had a hard time reacting despite the support from Friday's lows in the Nasdaq. I had bought both the 10:15 ET and 10:45 ET pivots, but neither moved more than about 4 NQ points in my favor before turning and heading lower again.



A third and final drop in the indices began at about 11:00 ET on Monday. The volume was lighter on this wave of selling, and while it began to move quickly lower, the pace changed into 11:30 ET. A very slightly lower low held as the Dow hit lows from a few weeks ago. Momentum increased immediately to the upside. After hitting the 5-minute 20 sma the indices stalled, but another strong buy setup followed into the 13:00 ET reversal period. The market had pulled over the 5-minute 20 sma by that point and had been correcting for about half an hour. The decline was gradual off the overhead resistance. It also took place on declining volume as it pulled back into the 5-minute 20 sma support, which hit at the same time as that reversal period. This kicked off a second wave of buying on the 5-minute time frame.



The indices moved higher throughout the early afternoon, establishing a 5-minute measured move into 13:30 ET. At that point the indices hit resistance from the first support zone of 10:15 ET and the market corrected for a second time in the afternoon. The pullback was sharper into 14:00 ET than the earlier drop, but volume still declined to show a lack of motivated sellers and the 5-minute 20 sma support zone held. New afternoon highs soon followed, although the larger price correction meant that they barely broke before the market was again stuck. This time the correction was very gradual.

From 14:30 ET onwards the indices just fell flat along the afternoon highs. This correction continued into 15:00 ET and the 5-minute 20 sma support once again. A final upside move then took the market all the way back into the morning highs zone and the opening prices for the session. This was also 5-minute 200 sma resistance in several of the major indices.

Given the time frame for this resistance, the market had a difficult time getting through it and turned over to sell off into the close. This move was steep and took back a large chunk of the gains. The Dow still gained 14.47 points to close at 13,27.8. The S&P 500 lost 1.85 points and ended the day at 1,451.70. The Nasdaq Comp. lost 6.59 points. It closed at 2,559.11.



As you all know, today marks the anniversary of the September 11 attacks. I want to send my thoughts out to all of those directly impacted by this event, including those who have lost family members in the ongoing war and those still overseas. I remember that day beginning much like any other day in the market for me, but before we could even get under way we began to see the catastrophe unfold before our eyes. I have never witnessed a live event such as that in my life and hope I never do again.

It will take many years for us to not have some reservations and nervousness each year when September 11 rolls around. On the first anniversary of that day I found myself on a very nearly deserted plane bound for Los Angeles. Even though many of us are less likely to alter our plans for the day to the point that we hole up in our homes, there is still the lingering concern that something, somewhere will go horribly wrong. The impact of this could be a rather subdued session on Tuesday. There is not much on the economic front in terms of data to move the market until next week.

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.