Equity bulls struggling heading into the week

Good day! On Friday the market gave the bulls something to worry about. The weekly expansion on the upside already has me a bit nervous on the long side, but the indexes have had a two-wave correction comparable to the one which took place in early April that has brought it into 50-day moving average support. This is often an area for another potential push to the upside. It wasn't quite ready on as Friday, as I mentioned in my list of stocks to watch, but it created a lot of speculation heading into the weekend.

Dow Jones Industrial Average

Most of the individual securities in the S&P 500 were not forming reversal patterns for strong daily downside into Friday, but they were showing extension on the intraday time frames that needed to be dealt with in order to trigger a favorable upside continuation pattern. This trend extension can be seen on the 15-minute charts of the ES and YM shown in Figures 1 and 2 in blue where each of the index futures contracts established the three waves of upside we followed in the second half of last week.

This 15-minute trend placement left most of the individual stocks in the indices confined to a choppy session on Friday, but the action in the overall market caused even greater jitters. The indices not only stalled at the upper end of their 60-minute channels from the correction this month, but they also teased the bulls by recovering from early losses by mid-day before giving back all of the gains once again by the closing bell.

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