Will equities hold September gains?

Good day! The indices are on track to log their strongest month in a year this September, making it the strongest September since that late 30s in the S&P 500 and Dow Jones Ind. Average... as long as it holds. Monday's focus was upon corporate deal-making with a number of companies in the midst of merger and acquisition talks. This focus dominated an otherwise lack-luster session. Although this week is a busy one for economic data, it doesn't really kick off until Tuesday. Last week's focus on housing will continue with the S&P/Case-Shiller Home Price Index on Tuesday morning. This measures home-price trends in 20 top markets. The Conference Board's latest Consumer Confidence Index will also be released in the morning.

Dow Jones Industrial Average

Monday's session was a slow one for the market, which took pause to catch its breath after Friday's strong rally. The momentum in the indices was shifting on Friday throughout most of the session following the strong opening gap. The indices made slightly higher highs throughout the day, which created the beginning of a Momentum Reversal into the closing bell. Because of the weekend, however, the indices couldn't do much about it until trading resumed in the futures on Sunday evening at the point the pattern triggered. The index futures held the zone of opening highs on Sunday evening and began a steady selloff that continued into the early morning hours on Tuesday.

Sunday evening's reversal off highs was not as strong as most Momentum Reversals because of the length of time it took to develop compared to Friday. An ideal Momentum Reversal could have taken an entire 24 hours or more with three clear-cut highs before a sharp breakdown could have taken place. Instead, the earlier trigger led to more rounded highs with the indices stepping lower into Tuesday morning.

S&P 500

Intraday activity in the markets on Monday did not readily reflect the premarket pattern. For day traders, the action would have seemed a great deal more random and choppy. A premarket base at lows broke lower into the opening bell to trigger an initial wave of intraday selling. An attempt to break lower again failed out of the 10:45 ET correction period and the zone of the previous lows held.

Although the indices based at that support throughout mid-day, the pace within the range itself from 11:15 to 13:30 ET was bullish. The indices were hugging the upper end of the mid-day range with stronger upside momentum within the range itself. This helped the market break higher around 13:30 ET to return to the upper end of the trading range. At that point, however, a clear-cut Momentum Reversal (TM) formed on the 2-5 minute time frame and the indices turned lower in the final hour of trade. This, combined with the continuation move into the final 30 minutes of trade, was the cleanest price action of the intraday session.

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