Stock market struggles to hold January gains

Market Snapshot for January 29, 2011 (6:00 p.m. ET), Closing Prices:

  • DOW 12,660.46 (-74.17, -0.58%), S&P 500 1,316.33 (-2.10, -0.16%), NASDAQ 2,816.55 (+11.27, +0.4%), Nikkei 225 8,841.22 (-, -%), DAX 6,511.98 (-27.87, -0.43%), FTSE 5,733.45 (-61.75, -1.07%)
  • OIL 99.56, GOLD 1,732.20, SILVER 33.79
  • EURO 1.3213, YEN 76.69, BRITISH POUND 1.5722, U.S. DOLLAR INDEX 78.98

Market Rally Falters

January has been an interesting month for the markets. Both the S&P 500 ($SPX) and Nasdaq-100 ($NDX) have been trading above their 10-day moving averages since late December. While there haven't been any exceptionally strong single-day moves this month, the indices made steady gains since the December 19th lows on the daily time frame.

Another correction attempt began on Thursday when premarket buying gave way to a momentum reversal and a strong day of steady selling from 10:00 a.m. ET and onward. Although the market attempted to recover afterhours, the indices created short patterns Friday morning as a result of the slower comparable momentum on the upside following the European open versus Thursday's downside. This change in momentum meant that the Friday morning rally was wave two in a two-wave continuation short setup in the index futures. It confirmed by pulling lower off 6:00 a.m. ET highs, hugging the 15 minute 20-period moving average support, and then breaking that support with an Avalanche (TM) short on the 15 minute time frame soon after 8:00 a.m. ET.

Dow Jones Industrial Average (Figure 1)

Although the selling continued into Friday morning in the indices, the session was a choppy one. By this point the indices were hugging 5 minute 20 sma resistance following a stronger premarket selloff. This was similar to the momentum shift that began with the stronger selling on the 15 minute time frame off Thursday's highs.

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