The stock indices followed up on Thursday's strong performance with a move to new multi-month highs in opening trade Friday but gains were extremely minimal with the S&P 500 and Dow stalling shy of their 200 day sma, before reversing for some morning profit taking. The pullback retraced close to 62% of the previous day's range before stabilizing ahead of a late day move back to recent range tops. This action carved out a hanging man on the NASDAQ. Hanging men need to be confirmed, so we need to see a close below before we can anticipate a pullback.

That said there are some early warning signs that lead us to believe that a correction is likely at these levels. We see some negative divergence of the RSI and MACD on the intraday chart. Heavier volume during recent intraday profit taking periods. A low fear factor as measured by the VXN volatility index which is testing a key pivot point as highlighted on the chart. This level marked the most recent peaks in October 2007. Other tell tale signs are a general lack of participation in recent bullish action by NASDAQ leaders, as well as financials on the S&P. Also the ratio of stocks carving out bearish engulfing bars vs. bullish engulfing bars: 87:13 on the NAZ and 67:6 on the NYSE.

Companies reporting earnings the week of May 19th-23rd include: Monday: CPB, ELON, EXM, LOW, PWRD, GRRF, CNTF, DRYS, and NCTY... Tuesday: AZO, CSUN, DRS, ESLT, HD, MDT, MF, SKS, SPLS, TGT, UNFI, ADI, HPQ, INTU, LTXX, PHHM, PVH, and RRGB... Wednesday: BJ, BRC, BWS, CHRS, EV, QXM, RTLX, ROST, SOLF, TLB, TNP, TWB, BRS, CHINA, CTRN, CSC, CPWM, GYMB, HOTT, NAPS, NTES, NTAP, PERY, PETM, CRM, SMTC, SNPS, WSTL, and ZL... Thursday: ANN, BKS, BONT, PLCE, CMCO, DKS, FLO, FRO, GME, GSOL, HRL, MPR, NWY, OPXT, PDCO, SAFM, SFL, SSI, SMRT, STP, TECD, BKE, TTC, ZLC, ARO, ARUN, BBOX, CA, DITC, GPS, HIBB, HRAY, LTON, NDSN, PSUN, VRGY, and ZUMZ... Friday: SKIL

Stocks over $5 posting the largest percentage loss over the last five sessions include: GENC -50.1%, USS -35.4%, CRZ -28.7%, CWCO -22.4%, NXTM -20.9%, CORS -19.3%, SURW -19.0%, YTEC -18.6%, WSPI -17.3%, PLA -17.2%, RSOL -17.0%, MCBC -16.8%, DSL -16.6%, RHD -15.9%, MSC -15.8%, GSI -15.6%, AEA -15.5%, LCAV -15.2%, TIGR -15.2%, WNR -14.3%, PHHM -13.9%, EXAR -13.9%, PFBC -13.9%, IMP -13.8%, ASPM -13.7%, BBW -13.3%, CRYP -13.3%.

Stocks over $5 posting the largest percentage gain over the last five sessions include: IOMI 140.4%, RCH 97.2%, PDO 94.8%, KUN 57.5%, CPSL 56.7%, CNET 48.8%, RADN 44.1%, SOLF 42.6%, CAAS 39.2%, CSIQ 37.1%, NCOC 36.3%, CSUN 36.0%, FSYS 34.1%, TDS.S 33.9%, SOL 33.8%, TDS 33.3%, LACO 32.5%, CVLT 29.2%, EDS 29.0%, VQ 28.9%, OSTK 28.4%, AVAN 27.2%, ZOLT 26.8%, EXM 25.7%, CYD 25.4%, FSIN 25.3%, MGAM 25.3%, NED 24.3%, DK 24.2%, NSPH 24.1%, VIT 24.0%, PAL 23.9%, APPY 23.7%, ULTR 23.7%, NLS 23.6%, ELON 23.6%, VISN 23.5%, GU 23.0%, KAZ 22.8%, CVI 22.2%, NILE 22.2%, CGRB 22.0%, LCRD 21.4%, PBH 20.8%, NOVN 20.8%, PSS 20.6%, OPTT 20.3%.