Equity index chop

Messy Monday

Good day! The market was virtually unchanged on Monday after a grueling session in which neither the bears nor the bulls were too keen to take the lead. Greece faced yet another downgrade by Standard & Poor's, but this barely fazed the market. Without any other strong economic data to get things moving, the indexes remained "stuck" throughout the first trading day of the new week. The sharp selloff last week, without any rounding off at lows to turn the market higher on anything larger than a five-minute time frame, offered little incentive to get things going from a technical standpoint.

Dow Jones Industrial Average

The Nasdaq-100 did hit and hold its 200-day moving average mid-day, which offered some relief to the selling in the afternoon, but the bulls found it difficult to hold onto any intraday gains on Monday. The session began with a minor upside gap as the indices tested upper resistance levels on a 15 minute time frame on an all-sessions chart. The pace of the buying slowed at that level, however, and created a Momentum Reversal on the 5 minute time frame. This is seen most clearly on the 15 minute chart of the ES (Figure 2) which includes pre-market trade, or the 5 minute chart of the NQ intraday (Figure 3). This short signal took the market lower into the 13:00 ET correction period, which is when the Nasdaq-100 hit its daily support. The indices bounced back sharply to the upper end of the day's range, but once again sold off into the close as it continued to teeter-totter back and forth on the 15 minute charts.

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