Good morning!  After three upside moves on the 60 minute charts since the lows of two weeks ago, the market again began to correct. The prior highs in the SP500 had helped to stall the upside move going into the week, but since the NASDAQ had fallen just short of a similar resistance level, it took a few days to see some stronger intraday selling. It began on Tuesday with a downside gap into the open. The gap was not extreme, but did put the Dow Jones Ind. Ave. and SP500 under their 5 minute 200 sma resistance. Given that the open came into support from the NASDAQ's 5 minute 200 sma, however, we saw a bit of corrective action into the open as the market fell into a narrowing range into the 10:45 ET reversal period.

The range broke lower with strong downside pace as the NASDAQ put in a third wave of selling since Monday's highs. This took that index into price support from Friday afternoon and the SP500 pulled into its 15 minute 200 sma support. The stronger Dow also had support coinciding with the other two indices at its gap zone from Friday's open. All of these coming on the heels of the 11:00 ET reversal period helped change the pace of the market going into lunch to favor an upside correction. 
 

Adding to the odds for some sort of reaction off the mid-day support was the change in pace on the downside versus upside moves on the 5 minute charts. Starting at about 11:35 ET, when the market pulled back up into the 5 minute 20 sma zone, the downside slowed as the indices hugged along the 5 minute 20 sma zone and fell lower at the same pace. Since volume was also light, it showed that, despite the market selling off, there was no longer a lot of downside panic. The market was hence able to trigger a larger correction off the support as the 5 minute 20 sma range broke coming out of the 12:00 ET reversal period. It continued higher after a small base into the 13:00 ET reversal zone, which took the indices back into the 10:45 ET morning breakdown zone. Since that level had served as support for the first hour of the day, it became resistance on the retracement back into it.

The market fell silent into 14:00 ET, forming a choppy range towards the highs of the day. When the 14:00 ET reversal period hit, the indices were coming into 5 minute 20 sma support. The Treasury market helped break this range and create a strong upside rally that took back all of the losses on the day. The market rallied until it hit strong 15-30 minute resistance with the closure of the gap in toe SP500 and Dow and the prior day's highs in the NASDAQ.

After the 15 minute resistance hit, the market just sold off at a more gradual pace into the close, putting in three waves of selling on the 2 minute charts by the end of the day. The SP500 even managed to make a slightly lower lows in the last couple minutes of the day. Unfortunately, even though we did see better intraday trends on Tuesday like we were expecting, such flush moves like the 14:00 ET one can be quite a blow if you are too heavily invested the wrong way. At least this time the market had already been rounding off at lows with the pace more gradual on the downside, hence making shorts in general higher risk.

The market is looking range bound with a slight downside bias as we head into Wednesday. We've seen a lot of overlap over the last couple of days as the market has corrected gradually off the daily highs. Since we had three waves of buying on the 60 minute charts going into those highs, the overall correction from such a move will typically take longer than the corrections between each move. The fact that the market has been running back and forth so easily between highs and lows, however, makes it more difficult to see a strong breakdown.

We have a pretty busy week on the economic front. Tuesday's PPI fell short of the expected 0.7% rise, coming in at +0.6%. The Core PPI was flat. In other economic news, the U.S. trade deficit came in at -$57.9 billion vs. -$59.8 billion. Only the technology stocks seems unfazed. The day ended with the Dow closing down -85.50 at -10597.44, the S&P -9.36 at -1231.20, and the Nasdaq -11.08 at -2171.75.

Updates: Swingtrades: AMT from the 22nd has hit some trailing stops after hitting target. WLP from the 30th has hit trailing stops, as did AEIS from Monday. MRVL from Friday has support at Thursday lows. VRTX from Monday has support under the 20 day sma. Position trades: HSP and CHRS long have support at the lows of the weekly bases. I am looking at acquiring NTRS as a position trade buy on upside breakouts from the current range on the weekly chart. 

Economic Reports and Events
Sep 14: Retail Sales (8:30 am), Capacity Utilization (9:15 am), Industrial Production (9:15 am)
Sep 15: Business Inventories  for Jul. (8:30 am), Core CPI  for Aug. (8:30 am), CPI for Aug. (8:30 am), Initial Claims 9/10 (8:30 am), NY Empire State Index for Sep (8:30 am), Philadelphia Fed. for Sep (12:00 pm)
Sep 16: Current Account Q2 (8:30 am), Michigan Sentiment- Prel. for Sep (9:45 am)

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 14: -
Sep 15: ADBE (A), BSC (B), PIR (?), TEK (?)
Sep 16: -

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.