Stock market struggles to hold January gains

The futures were having trouble making new lows intraday and experienced a high degree of price retracement from one bar to the next on the 15 minute time frame as the indices hugged 5 and 15 minute 20 sma resistance. This type of action tends to favor a break in the resistance, but it wasn't until afternoon that the pace of selling versus buying in mid-day trade began to reverse course. The 13:00 ET correction period is a very powerful time of the day for market reversals to begin, particularly when they correspond to strong support or resistance levels.

Unlike the momentum shifts we saw throughout the course of the daily rally, the recovery attempt on Friday afternoon was very meager. Upside momentum remained gradual compared to earlier swings and the futures market turned lower once again when trading resumed on Sunday evening. Many traders prefer to stay out of the markets over the weekend and late-day position covering is common. However, the higher the market heads without breaking the 10-day moving averages, the closer we get to that scenario playing and it's a good time to start scouting for weakness on daily charts.

S&P 500 (Figure 2)

Index Wrap-up

The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 74.17 points, or 0.58%, and closed at 12,660.46.Only two of the Dow's thirty index components posted a gain. They were Alcoa (AA) (+0.68%) and United Technologies (UTX) (+0.27%). The top percentage losers were Chevron (CVX) (-2.47%), Cisco Systems (CSCO) (-1.36%), and Travelers (TRV) (-1.11%).Chevron weighed heavily on the Dow after reporting earnings that fell short of expectations. The Dow ended the week lower by 0.47%. It is up 3.63% year-to-date.

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