Ever since last Tuesday's Fed meeting and the subsequent rally, the market has had a difficult time sustaining any momentum from one day to the next and even within a single session. A tug-of-war has been underway without either side prevailing. Instead the market has been stuck in that trading range we were expecting at the beginning of the week and not much had changed since.

While there have been some very large moves in a couple of stocks each day, such as in the China stocks, the market as a whole has been extremely sloppy. The stocks which grabbed my attention for play in Thursday's session were KongZhong Corp. (KONG), China Fin Online (JRJC), and Unibanco (UBB) on the long side of the market and Starbucks (SBUX) on the short side. Starbucks was hit when Banc of America cuts its rating to "sell" from "neutral" due to slowing growth stateside.



Before the opening bell, the Labor Department announced that first-time claims for jobless benefits fell to their lowest level last week since May. Additionally, the Commerce Dept. noted that U.S. economic growth accelerated in the second quarter. The market had been heading higher following Wednesday's close, but beginning at about 4:00 am the S&P 500 began to turn back over and the 8:30 am ET data didn't move the market very much at all. While the afterhours setups were very clear-cut, when the open rolled around the indices became very choppy and throughout the rest of the day they failed to break free from the congestion between the premarket highs and lows.



I didn't have a lot of luck with the futures market on Thursday and came out of it nearly flat after only four trades. I found it more difficult to avoid getting flushed and while the Dow had been the weaker index in recent days, that was not the case on Thursday when the Nasdaq lagged and the Dow led. As you can see on the charts, I have very few patterns even marked because there was so much overlap in price and chop that it was difficult to locate strong intraday triggers. The general areas of support and resistance at previous highs and lows and trend channel lines held, but they were not nearly as tight as in the week thus far and did not hold them as closely, so timing the pivots off the highs and lows was a bit more difficult than usual. Not even the intraday housing data phased the market. While sales dropped 45,000 to 825,000 in August, this weakness in the housing market is hardly newsworthy these days and was brushed off quickly.



Despite the slop, the market still managed to close near highs on this exceptionally narrow range day. The Dow gained 34.79 points and closed at 13,920.4 after testing the 14,000 zone several times. The S&P 500 rose 5.96 points. It closed at 1,531.38. The Nasdaq Composite also posted gains of 10.56 points. It ended the session at 2,709.59.

I would describe the current market bias as "hesitantly higher". Both the S&P 500 and Dow Jones Ind. Ave. had two waves of correction off highs within this range since the 19th, but since coming out of the second wave of selling they have not had much luck gaining momentum nor falling into a more gradual correction to allow for a strong upside breakout to more easily take place. Instead the upside creeping action adds risk for downside flush potential, even if it's only short-lived. The Nasdaq's better relative strength is also a bit of a potential problem for the bulls since it now has three waves of selling since it began to move higher on the 18th on the 120-minute chart and it is also now at risk of flushing lower into the weekend. So, while I will still be focusing primarily on the long side, I will be monitoring intraday momentum changes very closely.

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.