The market was incredibly choppy in Wednesday's session. The day began with very hesitant buying following a rather uneventful open. The higher prices climbed, the less sure they became. Volume declined, upside momentum slowed, and when the 10:45 ET reversal period hit the bulls began to head for the side exits. Momentum increased the lower prices fell. Support hit at 11:30 ET, but by that point the selling was so strong that the indices could not easily bounce back and instead formed a small bear flag to take prices even lower into the more substantial reversal period of 12:00 ET.



The slightly lower lows into noon were a first step for a larger correction off the lows in the indices. The market moved higher into the early afternoon and the 5-minute 20-period simple moving average, but then another tug-of-war began. Prices fell, but so did the volume as the indices hugged resistance, sliding lower in a choppy trend channel. A final flush to new lows at 13:45 ET forced out those with stops under the morning lows and allowed the market to pop out of the 14:00 ET reversal period. This reversal was the morning short setup reversed, but on a slightly smaller scale.

The market found strong price resistance as the indices came into the morning's congestion and breakdown levels. The strong buying began to wane and momentum shifted for the third time on the 15-minute charts. Prices again rolled over into the close, holding the day's range on smaller versions of previous price action.



When the closing bell rang, the result of this roller coaster ride was a virtually unchanged market in terms of price. The Dow Jones Industrial Average ($DJI) lost 25.20 points on Wednesday, closing at 13,207.3. Slightly more than half closed with gains. Walt Disney Co. (DIS) led the decliners with a loss of 2.3%, whereas Intel Corp. (INTC) gained 1.1%. The S&P 500 lost 1.98 points. It closed at 1,453. Unlike the Dow and S&Ps, the Nasdaq Composite ($COMPX) gained ground. It rose 4.98 points and closed at 2,601.01. Crude oil futures also rose on Wednesday after a string of steady losses. They closed higher by $1.16 at $91.24/barrel.

As we head into Thursday I am a bit more on the bullish side intraday, but it's not the best action yet. I would have liked to have seen a bit more downside first to flush things out a bit more before a bounce, and that is still possible, but the momentum within Wednesday's congestion has it favoring upside. I want to see it chop in the morning first before an attempt at a break. Otherwise if it just chops higher again into the morning and even into noon then we can see another strong downside flush into the second half of the day fairly easily. This would be the case especially if the 1475 zone holds in the ES (S&P 500 EMinis) on the 60-minute chart with a slower move into that level this time around than when it hit coming off the lows on the 18th.



NOTE: I will be taking time off for the holidays while my kids are on winter break. (Very hard to trade with kids running around!) So, my last column of the year will be for Monday's session and then it will resume following the evening of January 4. I hope you all have a wonderful holiday season!

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.