Good morning! Thursday was an exceptionally narrow range day for the market as a whole following the extreme downside the prior afternoon. This selling had left the market extended on the intraday charts, but the larger daily break in support had created higher risk for the bulls. Hence, the market didn't really have anywhere to go but sideways. This made for a higher risk trading day, although a number of individual stocks had some decent intraday moves as interest flowed away from the indices and into news. Despite the range, the market itself also saw a couple of decent setups on the 2-5 minute charts for daytraders.

After opening near the prior day's close, the market pulled up a little bit and began to hug the 5 minute 20 sma going into 10:30 ET. The break in this triggered a small Phoenix breakout to the upside as a continuation of the correction off the prior day's lows. The move didn't get that far though, pulling up the most in the NQ (NASDAQ 100 EMini) right into the 15 minute 200 sma resistance on the all sessions charts. This is the chart that includes premarket trading and the moving averages on it work as well as on the intraday charts, so I keep them up and give them equal weight. Since the market had rounded off into this resistance level with a declining upside pace, the correction off the resistance was more rapid, dropping quickly back into the 15 minute 20 sma on the all sessions NQ and ES (SP500 EMini) support at 11:35 ET.

The change in pace created a more gradual reaction to the support zone. The market instead based on the 5 minute charts, forming an Avalanche short setup as volume dropped off even more into noon. The target zone was the middle of the 5 minute range that had formed going into the morning. I was looking for 1565 on the NQ. It fell a tick short, but the SP500 still managed to put in an equal move on the 5 minute charts as compared to the initial pivot from morning highs. The market then held that very narrow range from the Avalanche breakdown until about 14:15 ET when the pace picked up for a small breakout on the 5 minute charts that took the SP500 and Dow Jones Ind. Ave. into their 30 minute 20 sma resistance. This level halted the buying and the market continued the range into the close.

The narrow range with declining volume at lows is suggestive of more downside to come. Light volume following a correction from support tends to mean that the bulls aren't jumping on board and are leery of continued selling. The pace intraday on the upside is stronger than the downside, so ideally we'll see this turn over before the market breaks down to help decrease risk on a breakdown. There is not much support until the market comes into the 100 and 200 day moving averages in the NASDAQ and SP500 and the 20 week sma in all three indices once this level breaks.

Updates: AMT from Monday corrected a bit Thursday. The 20 day sma is now support. WWY has a bit more selling in the morning before pivoting back into the range before the end of the day. Some stops were hit.  INFY short from the 15th hit new lows before correcting intraday off $66.61. The market target is still $64-$65, and resistance is the 20 day sma. I am still watching HSP for a position trade buy on a breakout from the weekly range.

Economic Reports and Events
Aug. 26: Mich. sentiment-Rev. for Aug. (9:45 am)
Aug. 29: -
Aug. 30: Consumer Confidence for Aug. (10:00 am), Factory Orders for Jul. (10:00 am), FOMC Minutes (2:00 pm)
Aug. 31: Chain Deflator-Prel. for Q2 (8:30 am), GDP-Prel. for Q2 (8:30), Chicago PMI for Aug. (10:00 am)
Sep. 01: Initial Claims 08/27 (8:30 am), Personal Income for Jul. (8:30 am), Personal Spending for Jul. (8:30 am), Construction Spending for Jul. (10:00 am), ISM Index for Aug. (10:00 am), Auto Sales for Aug. (12:00 am ), Truck Sales for Aug. (12:00 am)
Sep. 02: Average Workweek for Aug. (8:30 am), Hourly Earnings for Aug. (8:30 am), Nonfarm Payrolls for Aug. (8:30 am), Unemployment Rate for Aug. (8:30 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. 26: -
Aug. 29: -
Aug. 30: ADCT (A), SMTC (A)
Aug. 31: SNY (B), TIF (B)
Sep. 01: CIEN (B), COCO (B), FNSR (A), HRB (A)
Sep. 02: -
Sep. 05: -

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.