Good morning! The market had a strong start to the shortened trading week on Tuesday. It began with an upside gap that initially hit resistance about 15 minutes into the day when the indices came into price resistance from last week's highs. This created the odds for a daily triangle over the next couple of weeks instead of a retest of the weekly support zone, which were the two options I was looking at heading into the day.

After stalling briefly at last Thursday's pivot highs, the market soon broke through them, forming a strong uptrend throughout the morning with only small 1-2 minute bull flags before stalling after a third waves of buying on those time frames between 10:30-10:45 ET. The volume on the morning move provided confirmation for the upside breakout, making a correction over noon in terms of price very difficult. Instead the market based into the 5 minute 20 sma support and then held that range going into the early afternoon. Declining volume and the slower downside pace within the range favored an upside resolution to it before the day wound to a close.

The breakout higher on Tuesday afternoon set up early in both the SP500 and Dow Jones Ind. Ave. by making slightly higher highs into the 13:00 and then 14:00 ET reversal period. As they ran into the 15 minute 20 sma support, however, with the 15:00 ET reversal period, the SP500 and Dow both broke more quickly to new intraday highs. The NASDAQ, which had maintained the most solid base over noon, also followed suit, although its relative weakness as compared to the other two indices remained.

Given the strength of the current move from last week's lows, I am looking for a retest of the zone from the prior daily highs at some point before this weekend. A number of stocks have had some great daily breakouts already, such as BRCM, FLSH and WLP, and it seems likely that these moves will continue. As the 30-120 minute charts hit an equal move as compared to the rally from last week, however, we should see a greater intraday correction on those time frames. It is rare to see more than two trend days in a row on a 15 minute chart with the 20 sma as support.

Trading Tips: I am not sure how the rest of you folks are doing, but so far this week the electricity and inet has been less than reliable in this section of Florida, with rumors of rolling blackouts. Whether that occurs or not, you should always be more cautious in such circumstances and be sure to have automatic stop orders on the books just in case. Luckily we have dsl as a backup on one of the computers to help me out with open positions today since my cable was down most of the day. A more economical option, however, is to keep a minimal use backup inet. You can get them for just a couple of dollars a month from providers such as AOL and are also great if you travel.

Updates: Swingtrades: AMT from the 22nd and WLP from the 30th have trailing stops in place. AEIS from Monday has support at the 20 day sma. Position trades: HSP and CHRS long have support at the lows of the weekly bases.

Economic Reports and Events
Sep 07: Productivity -Rev. for Q2 (8:30 am), Fed's Beige Book (2:00 pm)
Sep 08: Initial Claims 09/03 (8:30 am), Wholesale Inventories for Jul (10:00 am), Consumer Credit for Jul (3:00pm)
Sep 09: Export Prices ex-ag. for Aug. (8:30 am), Import Prices ex-oil for Aug. (8:30 am)
Sep 12: -
Sep 13: Core PPI for Aug. (8:30 am), PPI for Aug. (8:30 am), Trade Balance for Jul (8:30 am), Treasury Budget for Aug. (2:00 pm)

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
Sep 07: ABS (?), HOV (A), NAV (B), COO (A)
Sep 08: BRL (B), NSM (?), SHLD (B)
Sep 09: -
Sep 12: CPB (B), ENER (?), PLL (A)
Sep 13: BBY (?)

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.