The market experienced a nice upside move on Thursday to continue the correction off the daily support that hit going into the end of last week and beginning of this. On Wednesday afternoon the indices began to move higher following a pullback throughout the morning. This move continued well into Thursday afternoon. The index futures had fallen a bit off premarket highs on the 8:30 ET jobs data. The Labor Department had reported that unemployment claims rose 4,000 to 372,000 last week, which was a bit more than expected. Lows held at 9:00 ET though and the market turned higher into the open.

The morning fell into congestion early on in the day. The most notable action early on was the 10:30 oil inventory data. Crude supplies fell by 8.8 million barrels to 311.6 million last week due to delays in off-loading crude oil tankers on the Gulf. The market flushed lower on the data, but then began a steady recovery while oil prices turned over and began a selloff that would last well into the afternoon and end with oil futures down more than $4/barrel to close at $126.62 a barrel.

Dow Jones Industrial Average ($DJI)


At about 10:45 ET the indices all broke to new intraday highs. From that point onward into the early afternoon the 5 minute 20 period simple moving average served as support and the indices stepped higher with the last strong upside move taking place at 12:30 ET. Most trends such as this will correct into the afternoon. Given the momentum on the upside, however, the odds were higher for a more gradual correction or roll-over at highs.

The 13:30 ET correction period held the 5 minute 20 sma for the last time. The market began to congest along that level throughout the next hour. The indices tried another move higher shortly after 14:00 ET, but due to the intraday extension I stayed on the sidelines. It created a trap and was followed by a choppy yet steady move lower into the closing bell. I had been looking for an Avalanche on the 5 minute time frame to help turn the momentum over by hugging the 5 minute 20 sma in the Nasdaq for instance before breaking, but the market had other plans and stepped lower on a 2 minute chart.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) closed higher by 52.19 points, or 0.4%, on Thursday at 12,646.22. It had been up well over 100 points earlier, but was the weakest of the indices in the afternoon. The S&P 500 ($SPX) rose 7.42 points on Thursday, or 0.5%, and closed at 1,398.26. Financials led on the upside with gains of 1.8%, while energy stocks fell 2.6%. The Nasdaq Composite ($COMPX) held up best with a gain of 21.62 points, or 0.9%. It closed at 2,508.32.

Nasdaq Composite ($COMPX)


My outlook for the week had not changed yet. I continue to expect more correction off the recent daily lows with greater daily overlap. We are likely to see the overlap come into play more on Friday since the 60 minute charts are favoring more of a pullback off Thursday's highs with support in the congestion zone from Wednesday for the Dow and the upper end of that day's range for the S&Ps and Nasdaq.

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.