Market Posts a Loss for November
Good day! November was a difficult month for the market. It began by pushing into previous monthly highs and even managed slightly higher highs for the year, but after two months of strong gains it was starting to run out of steam. It finally succumbed to exhaustion on November 16th and the indices quickly fell through their 20 day moving averages and into their 50 day ones. This support level proved to be enough to stem the flow of selling, but it's been a roller coaster of a ride intraday ever since.
Dow Jones Industrial Average
Volume picked up on Tuesday as traders continued to return from the holiday weekend. The session began with a larger-than-average gap to the downside after early morning selling returned the index futures to previous lows. They continued to hold support, however, and managed a rapid recovery attempt once the highs of the initial 15 minutes of the regular trading session broke. I will often use this level as a gauge to judge the strength of a gap and a strong downside gap that breaks 15 minute highs is typically a good buy trigger.
The initial gap setup took the index futures higher unto 10:30 a.m. ET where they met their first major intraday resistance at the 5 minute 20 period moving average. Prices fell into a long period of intraday congestion at that resistance level that lasted throughout the remainder of the morning. The Nasdaq displayed the greatest relative weakest throughout this period. After two small waves of selling within the congestion, the market made a play for a break higher heading into noon. This was still on the early side when examined on the 15 minute charts, but the bulls were not fazed.
The market continued to shift momentum on the 5 minute time frame with another very gradual correction off resistance that took place in the upper end of the late morning trading range. This triggered a stronger buy setup heading into the 13:00 ET correction period.