Good day! I hope you all had a good time over the last couple of days! I took things pretty slow on Thursday due to it being my first day back since the expo. On the daily charts the market was coming into some pretty significant resistance going into the day. The SP500 and Dow Jones Ind. Ave. were both hitting prior highs and the slower NASDAQ was running into its 50 day sma resistance. Intraday it was also forming a 60 minute Avalanche pattern by basing along the 60 minute 20 sma after falling from Tuesday highs. The SP500 and Dow were coming off double tops on the 60 minute charts as well. As a result, the market began the day with a more bearish bias to allow for some correction from these resistance levels.

The first intraday pattern that we saw develop was a smaller 5 minute Avalanche in the SP500 and Dow as the market based along out of the open with light volume. The pattern broke lower just after 10:00 ET and continued very strongly into 10:30 ET. At that time an exhaustion move formed with volume spiking into an equal move support level on the 30 minute NASDAQ and moving average support at the SP500's 15 minute 200 sma. Due to the strong pace of this morning move, it made it likely that we'd see slower corrective action over noon with a high risk trading environment. Nevertheless, this mid-day move did manage to put in three waves of buying, even though each wave did not give you great risk to reward. This took the indices into their 15 minute 20 sma resistance going into the 13:00 ET reversal period before selling hit once again.

The combination of the 15 minute 20 sma with the 13:00 ET reversal period, after three waves of buying on the 2-5 minute charts all helped to point the way to an afternoon breakdown. The pace was not at all comparable to the morning's drop, however, and the morning lows served as initial support as a result. The reaction held the 5 minute 20 sma, leading to new lows going into the 15:00 ET reversal period where we saw another smaller exhaustion move as volume spiked with the daily SP500 and Dow coming into their 10 day simple moving averages and the NASDAQ hitting its 20 day sma support. These, along with the reversal period and 5 minute equal move support, helped to pull the market back into the 5 minute 20 sma before the end of the day.

I do not think that we've seen enough correction to the recent daily resistance for the selling to be over just yet. Intraday we do not have a setup forming since the 13:00 ET breakdown Thursday though, so I'll be watching for something similar on the 15-60 minute charts. Overall it is still looking like the SP500 and Dow are likely to fall into a longer trading range on the weekly charts.

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.