Good morning! The market saw a second trend day in a row on Wednesday, but the action was less pronounced than the prior morning. With volume on the light side, the indices crept higher throughout the session, barely breaking prior highs with each move before pulling sharply back into the lower trend channel of the range.

The day began with some selling as the market reacted to the highs of the range that hit into Tuesday's close. Declining gradually into the 15 minute 20 sma in the SP500 and Dow Jones, Ind. Ave. and more quickly to the prior afternoon lows in the NASDAQ, the market found support with the 10:15 ET reversal period. We saw some rounding off at these lows with a slightly lower low on the two minutes charts before pivoting and picking up speed back into the resistance from the upper trend channel. In the weaker NASDAQ, this meant the highs of the range at the whole number resistance in the NASDAQ EMini Futures (NQ), which hit at about the same time as the 11:00 ET reversal period and led to a pivot high heading into lunch.

After pulling in from the mid-morning pivot highs, the risk in the market increased dramatically. The indices managed to make it back to the 5 minute 20 sma support where they fell into a narrowing range with declining volume. Initially it looked as though this range would try to break slightly lower with an Avalanche pattern due to the indices hugging their 20 sma support support. When they attempted to do so around noon, however, there was no conviction and the market pulled back up to form a 5 minute triangle instead. Even though the pace within the triangle was still more gradual on the upside, the fact that the Avalanche could not break the 5 minute 20 sma to trigger made the range more bullish. It reacted by breaking higher into the 12:30 ET reversal period, although at a rather slow pace.

The market went on to make slightly higher highs just after 13:00 ET, but stalled once more at the upper trend channel in the SP500 and Dow. This was followed by a rather quick drop back into the channel support. Since the overall upside moves since 11:00 ET were becoming more and more gradual as compared to the downside into support, I thought it was possible that we see a sharp late day drop if the 15 minute 20 sma and trend channel support was able to break. I started watching for an Avalanche on the 5 minute charts again into 14:00 ET, but once more the support held and the pace picked up a bit into that reversal period. This choppy back and forth action on the 15 minute charts within the trend channel from the prior afternoon continued into the close, unable to break the range before the end of the day.

After a day and a half of choppy trading, I am expecting some better action on Thursday. It may not be a trend day, but we should see more intraday patterns than simple pivots. I will be watching for a break in that 15 minute trend channel, either way, as a guideline for intraday bias. At this point I can see arguments for breaks in either direction and since I found yesterday's session intraday to be rather difficult in the equities market, I will continue to trade more cautiously until that channel range does break. Then I will look for 5 minute continuation patterns in the direction of the breakout.

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 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 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.