Good morning! Thursday's session was another slow one, beginning with a decent downside gap that took the indices into the prior 15 minute lows going into the day. They held the best in the NASDAQ, creating a bit of upside out of the open as the market corrected to the support level by pulling up into the 5 minute 20 sma and closing the gap in the SP500. This resistance hit at about 10:30 ET and the market then fell into a much longer 5 minute range going into noon.

Once again the 12:00 ET reversal period held very well, leading to a cup with handle breakout on the 5 minute SP500 and Dow Jones Ind. Ave. This took the market back to morning highs where it based for about 45 minutes to form a bull flag going into the 5 minute 20 sma.  This set up going out of the 13:00 ET reversal period and created the strongest intraday move of the session by pulling back up into price resistance on the 15 minute charts from the prior day's afternoon range. It hit at 13:30 ET. Despite the strong upside pace, the resistance held very well and the market steadily sold off into the afternoon. The first support at the 5 minute 20 sma had little affect on the selling and it soon broke back into the lows of the day in the NASDAQ and 15 minute 20 sma support in the Dow.

The remainder of the day was once again on they choppy side. Despite strong upside pace off the support, the market was unable to hold onto gains once the 5 minute 20 sma hit. The indices instead fell into another range like they had seen in the morning. This held for the last 90 minutes of the day.

The market still has more of a bearish bias going into Friday. There is not a strong intraday pattern, however, so I would continue to use greater caution and focus more on intraday action. One pattern that traders will often fall into during a market like this is to press to hard for trades, hence over-trading, which can have a strong negative affect on their accounts. There are still some great day and swingtrades setups, but you just have to be patient.

Updates: VAR from the 20th $38 around hit new highs the 27th at $40.70 before closing on the day with a base at highs ahead of earnings for swingtraders. For a larger position trade it hit a trailing stop under $39. I am watching HSP for a breakout on the daily and weekly charts, but it can easily take a few weeks to even a few months to develop with the 20 week and 20 month simple moving averages serving as support. QLGC is on my watch list as a longer term short on a break down out of the current weekly low-level base. For swingtrades, INFY broke down on Monday and hit initial support at the 100 day moving average zone. The 50 day sma will serve as resistance.

Economic Reports and Events
Aug. 19: -
Aug. 22: -
Aug. 23: Existing Home Sales for Jul. (10:00 am)

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 stocks' earnings dates 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
Aug. 19: ANN (B), CHINA (A)
Aug. 22: -
Aug. 23: WSM (B), WIND (?)

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.