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May 1, 2006
 


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       Daily Editorial:
 

Market Poised For Upside Breakout

Good morning!  After correcting for over a week with a choppy trading range, the market appears ready to attempt another break to highs. Friday was a relatively slow day for the indices after the first 45 minutes or so. A strong downside gap began to fill quickly after 10:00 ET. The Nasdaq saw the most relative weakness following disappointing results by Microsoft Corp. (MSFT), but it, as well as the S&P 500 and Dow Jones Industrial Average, soon recovered. The Dow and S&P 500 ran headlong into Thursday's highs before slowing. The Nasdaq also hit resistance at that time with the 5 minute 20 sma and 5 minute 200 simple moving average.
 
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With all three of the major indices running into a wall at the same time, the market began to turn over into the latter half of the morning. The pace on the downside was not as strong as the prior upside move was, but it was still stronger than average, creating higher odds of a trading range into the afternoon. It ended up being a rather large range since the indices formed a 5 minute continuation of the selling shortly after a reprieve into 11:00 ET. Then came a third move lower out of 12:30 ET, led primarily by the weaker Nasdaq.

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After three waves of selling the market is more prone to a longer correction. This took place into 13:00 ET as the indices popped quickly off lows and then began to fall into a range along the 5 minute 20 sma, which became support. The support gradually gave way, eventually leading to an Avalanche in the form of an upside down Cup with Handle on the 5 minute charts. It triggered into the 15:00 ET reversal period, but the move was scalpish and unable to bust the S&P 500's 5 minute 200 sma support and the Nasdaq's prior lows intraday.

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Throughout the second half of the morning and into the afternoon, volume in the market declined. This lasted into the close, indicating a lot of indecision into the weekend. I would still like to see a few more days of correction from these highs to deal with Thursday's early attempt at a breakout in the Dow. It will be a busy week for economic data, however, and that will likely add to the action this week in addition to the continuation of earnings season. Over the weekend, most of the setups I located on daily charts were related to gold: AUY, CNC, NG, GBN, etc. I'll be keeping an eye on these for continued upside opportunities over the next several days.
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 Economic Reports and Events:

May 01: Personal Income (8:30 am), Personal Spending for Mar (8:30 am), Construction Spending for Mar (10:00 am), ISM Index for Apr (10:00 am)

May 02: Auto Sales for Apr (12:00 am), Truck Sales for Apr (12:00 am)

May 03: Factory Orders for Mar (10:00 am), ISM Services for Apr (10:00 am), Crude Inventories 04/28 (10:30 am)

May 04: Initial Claims 04/29 (8:30 am), Productivity-Prel for Q1 (8:30 am)

May 05: Average Workweek for Apr (8:30 am), Hourly Earnings for Apr (8:30 am), Nonfarm Payrolls for Apr (8:30 am), Unemployment Rate for Apr (8:30 am), Consumer Credit for Mar (15:00 pm)
 
   Earnings Announcements of Interest:
 
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing

May 01: CHK (A), BGC (A), HRS (A), HUM (05:00 am ET), IVAC (?), NR (A), NXG (?), PLAY (A), PEG (8:45 am ET), SWN (A), SYY (?), PFG (A), TSN (B)

May 02: LEND (B), AL (?), AW (a), ACAS (B), AEL (A), ADM (B), ARTG (B), BDN (A), BWNG (B), CLZR (A), CMX (B), CENX (A), CEPH (A), CHTR (08:00 am ET), CBB (B), DNR (?), DUK (B), EXP (A), ECLP (B), EDS (?), EMR (B), ETR (B), EOP (B), FPL (?), GNSS (?), GFI (?), GW (?), HELX (A), HLT (B), HOMS (?), IACI (B), ICE (B), KSU (B), LNC (A), LTR (B), MAS (?), MDG (4:00 pm ET), NBL (?), OKE (A), PDLI (?), PPC (B), PNM (A), PWAV (A), PCP (?), KWK (A), RRD (B), SAFC (B), SIRI (?), SPC (B), STA (B), SBL (?), TGEN (B), THOR (?), TXU (?), VZ (?), VSH (B), VC (B), VNO (B)

May 03: TFSM (A), AGN (B), LNT (B), AT (?), WTR (?), ABX (A), CBJ (A), CI (B), CZN (B), CCU (B), CLX (?), CMS (B), CTSH (B), ED (?), CTB (?), CEI (B), DVA (B), DVN (B), D (B), EMKR (?), EQR (?), FBN (?), GRMN (B), GGB (?), GLG (B), GSF (A), HL (08:00 am ET), MMC (B), NLS (?), NI (B), PAAS (A), PKD (?), PTEN (B), PCG (?), POL (A), PRTL (?), PG (?), PRU (A), QLGC (A), Q (B), RHD (A), RA (A), SKYW (?), SBUX (?), SUN (A), TDW (B), TWX (B), TRN (A), TRX (B), UNTD (A), UNM (A), WFMI (A), WSH (A)

May 04: ATVI (A), ANR (B), AEE (B), AU (?), AIV (?), AVID (?), ACLS (5:00 pm ET), BRL (B), BKHM (A), CNQ (?), CSE (B), CNP (B), CEM (A), CQB (A), CNO (A), CVS (B), EK (B), ELN (B), EGO (A), HLTH (A), GMST (A), ICOS (?), INCY (B), IDCC (B), IIP (A), IP (B), ITG (B), JAH (B), KMG (?), KSE (B), LVS (A), MVL (B), MCK (A), NEW (?), NXL (B), OIS (B), PXP (B), PXP (B), QSFT (A), RGLD (B), TSG (?), STN (?), SU (?), TSO (?), DTV (B), EL (B), PMI (?), THE (B), TOT (02:00 am ET), RIG (B), TRZ (B), TYC (B), UBS (B), UVN (A), VRX (?), WMB (B)

May 05: AGU (?), CRK (?), EP (B), EOG (?), GSX (?), HMY (?), MHS (B), NSR (B), SNY (?), THQI (B)

Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.
 

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