After Wednesday's stellar performance, the market took the day to catch its breath on Thursday. You can think of market rallies much the same way you would a person who has taken up running. They can go for longer distances without a rest if they set a steady pace to begin with, but if they decide to sprint, they will become more easily exhausted and will either need to slow down more quickly or stop for a bit to recover. On Wednesday the market was at full sprint in the morning, slowed the pace somewhat into the afternoon and then decided to sit on the bench for awhile going into the next day.

Volume was the lightest of the week in Thursday's session, and the indices overall chopped around quite a bit on the 5- and 15-minute charts, but a number of opportunities still presented themselves intraday in individual issues, as well as the market itself for those who either went for the very minor scalps or else held through the chop on the moves off the larger 15-minute support and resistance levels.

Among the best-trending stocks on the upside on Thursday were top names such as Apple Inc. (AAPL), First Solar Inc. (FSLR), Nucor Corp. (NUE), and Biogen Idec Inc. (BIIB). Zoltek Cos Inc. (ZOLT) and MGI Parma Inc. (MOGN) were also huge movers. Leading stocks on the downside were Lehman Bros (LEH), CIT Group (CIT), Aeropostale (ARO), Jo-Ann Stores Inc. (JAS), Wynn Resorts Ltd (WYNN), and F5 Networks Inc. (FFIV).



Despite the handful of market movers, the overall market's exhaustion made itself apparent almost immediately into the open. After gapping slightly lower, the morning gap filled within the first 15 minutes of the session. When the 9:15 ET reversal period hit, the Nasdaq Composite ($COMPX) was also running into resistance. It was hitting Wednesday's highs, while the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) were at their 5-minute 20 simple moving average resistance levels. The market turned quickly at that point, heading back to the congestion from mid-day on Wednesday before again flipping over into the 10:15 ET reversal period.



After 10:15 ET the indices climbed steadily back into the highs of the trading range that were established the previous afternoon. The buying was choppy with a lot of overlap from one bar to the next on the 5 minute time frame until the last leg up at 11:30 ET. Mid-day, beginning at this time, was really the only time where the action was smoother in the indices. The market rounded off a bit at highs at noon and then a solid price decline began off the upper resistance zone. The 5-minute 20 sma served as support and volume declined as the market reacted to this support level before giving way to a second wave of selling into 13:00 ET.

The momentum began to slow again into 13:00 ET and the choppy market action returned once more. Even though the market reacted to the 13:00 ET reversal period, the bounce was short-lived. The market chopped lower into 13:45 ET and the lower end of the trading range on the 15-minute time frame before moving higher into a third test of the range's highs at the 15:00 ET reversal period. This last leg of upside was the most choppy move of the day on the 5-minute time frame. The overlap was very pronounced from one bar to the next and it was more difficult to time setups in the indices themselves. The 15:00 ET reversal period did hold well, but the choppy trading also held and the market accomplished very little in the final hour of trading.



The market managed to close higher on Thursday, but barely. The Dow climbed 22.3 points to close at 13,311.7. The S&P 500 rose only 0.7 point and closed at 1,469.73. The Nasdaq Composite gained 5.22 points. It ended the day at 2,668.13. I expect that the range will widen somewhat on Friday's session, but that we will again see a lot of overlap in prices on the 15-minute time frame. Volume is also likely to be lighter than on Thursday. Heading into next week, however, I expect the upside to resume, but on a much more muted scale than on Wednesday. It is highly probable that the action we saw on Thursday afternoon on the 5-minute time frame is going to repeat itself on the daily time frame in the indices going into the end of the year.

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.