Stock market bulls face another challenge

Market Snapshot for November 13, 2011 (7:22 a.m. ET):

Closing Prices:

  • DOW 12,153.68 (+259.89, +2.19%), S&P 500 1,263.85 (+24.16, +1.95%), NASDAQ 2,678.75 (+53.60, +2.04%), Nikkei 225 8,514.47 (+13.67, +0.16%), DAX 6,057.03 (+189.22, +3.22%), FTSE 5,545.38 (+100.56, +1.85%)
  • OIL 98.99, GOLD 1,788.10, SILVER 34.682
  • EURO 1.3746, YEN 77.10, BRITISH POUND 1.6077, U.S. DOLLAR INDEX 77.13

Congestion Continued into Weekend

The market has been dealing with resistance on the daily time frame over the past couple of weeks while earnings season reached its peak and the EU attempted to sort out the most recent developments in Greece and Italy where the prime ministers in both countries have since announced their resignations. A shift in upside momentum mid-week last week held back the bulls that had led the way heading into the month and strong selling hit on Wednesday that took the indices back to the lower end of the 30-minute trading range. A Momentum Reversal buy triggered early Thursday morning in premarket trade as the European markets opened, but the indices struggled to find direction intraday.

Dow Jones Industrial Average (Figure 1)

The market's intraday struggles continued on Friday. Congestion in premarket trade created a strong breakout early in the day, but volume was light due to the Veteran's Day holiday and the momentum slowed by mid-morning. Trade after the 10:45 ET correction period was fairly choppy with a lot of overlap on the five minute time frame as well as the 15 minute one. Technical patterns and support and resistance levels still continued to hold extremely well, but the greater degree of price overlap and tighter range of the congestion limited follow-through and diminished reward potential compared to traditional stop zones.

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