After flirting with negative territory on several occasions, the market managed to close with some modest gains. The Dow Jones Industrial Average ($DJI) rose 81.58 points on Thursday, or 0.7%, and closed at 11,229.02. Alcoa Inc. (AA) led the gainers. It climbed $3.06, or 9.7%, to new all-time highs after China announced that it would be cutting its production of the metal by up to 10%. Intel Corp. (INTC) was the second strongest stock in the index. It rose 4.09% on a rebound from sharp losses in Wednesday's session. Continuing its steady meltdown, American Intl. Group Inc. (AIG) was the biggest loser, down another 8.22% to hit levels not seen since 1996. Another stock making new lows was General Motors (GM), which fell 6.20% on Thursday. Investors would be rejoicing if it were trading back at 1996 levels! Instead, it cleared the $10 "support" to close at $9.69.

The S&P 500 ($SPX) gained 8.7 points, or 0.7%, on Thursday. Materials gained 3.5% to weigh in as the leading sector. Influencing the sector was Dow Chemical Co.'s (DOW) agreement to purchase Rohm & Haas Co. (ROH) for $15 billion. DOW fell 4.2% on the day, while ROH closed higher by 64.2%. The energy sector came in second on the gainers side. It rose 2.9%. Crude oil regained $5 in Thursday's session after heavy losses earlier in the week and closed higher by 4.1% at $141.65 a barrel on the New York Mercantile Exchange. Retailers were among the biggest losers. J.C. Penney Co. Inc. (JCP) took a sharp swing lower for a loss of 10.1%. Target Corp. (TGT) fell 5.14%. Of course, financials also felt another blow. Go figure. Fannie Mae (FNM) and Freddie Mac (FRE) are on their last leg. Both hit another double digit loss with FNM down 13.8% and FRE down 22% by the closing bell. Lehman Bros. (LEH) fell 12.4%.

The Nasdaq Composite ($COMPX) rose 22.96 points, or 1%, on Thursday and closed at 2,257.85. Among the Nasdaq's leaders were Verisign (VRSN), which rose steadily throughout the session to close higher by 5.3%; Patterson Uti. Energy (PTEN), which climbed 3.66% with the energy sector; and Dell Inc. (DELL), which gained 3.47%. Wynn Resorts (WYNN) suffered further losses, down 9.82%. Staples (SPLS) (-2.87%) and Starbucks Corp. (SBUX) (-2.38%) also slipped lower.

Dow Jones Industrial Average ($DJI)


Now that we've taken a look at the bigger picture, let's break it down and examine the action intraday on Thursday. The session began with very little change since the prior day's close. The market had fallen sharply on Wednesday afternoon and this left it a bit extended into Thursday morning, but the volume had not really spiked to any large degree to confirm an exhaustion move. The indices did manage to pull higher out of the opening bell, but the move did not last long.

As soon as the 5 minute 20 period simple moving averages hit on the S&P 500 and Dow Jones Industrial Average the market turned back around. The Nasdaq Composite found resistance at the 5 minute 200 sma at the same time, so it also fell into 10:00 ET, although the larger opening rally helped it hold up better when the market turned. Both the Dow and S&Ps fell easily to new lows on the week, but the Nasdaq found support at the closing lows from Wednesday. This hit at the same time as the 10:15 ET correction period and the market reversed course once again.

S&P 500 ($SPX)


Action throughout the second half of the morning was rather choppy. The indices formed a two-wave continuation pattern between the 10:45 ET correction period and the 11:15 one, breaking higher into 11:30 ET. The Nasdaq was a bit slow and held the range longer into 12:00 ET before it was able to tag along. By 12:15 ET, however, all three of the indices were testing price resistance at the morning highs.

Although the smaller 2 minute moves on the upside were on the strong side, the larger momentum in the market remained indecisive. The indices continued to hold the morning's range into the first hour of the afternoon, pulling back into the 13:00 ET correction period on light volume but modest pace. This was yet another variation of a two-wave correction and the lower end of the morning's channel held, leading to a third push higher on a 5 minute time frame after reversing from the morning lows.

Nasdaq Composite ($COMPX)


Upper channel resistance on the 5 minute time frame, as well as the 5 minute 200 sma resistance in all three indices intraday, held going into the 14:00 ET correction period. After three waves of buying, the upside action intraday needed a little longer to rest. Paying tribute to the steep declines of recent sessions, the market fell sharply from 14:00 ET into nearly 15:00 ET. This correction period also held well, however, and the S&Ps were able to hold the morning lows. The indices pulled higher into the 5 minute 20 sma, stalled and threatened to break lower again, but ultimately held on and rallied into the close. Whether the downside action was enough to finally flush the market out on Thursday is something we shall soon find out. The 60 minute charts are once again looking bullish, so my bias into Friday will be on the upside.

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.