Good day! Wednesday's session was a great one for the pivot type of action I was looking for heading into the day. This was because the market dropped so sharply on Tuesday that it needed to correct, but at the same time, the strong pace on the descent meant that a correction would be slower and more range bound. Hence, it was a good day for pivots off support and resistance, but not as great of a day for trend traders looking for flags and breakouts.

The morning kicked off with a decent gap up into the open. This took the NASDAQ right into the 15 minute 20 sma resistance, making it likely that the initial opening prices would hold. The reaction was a closure of the gap in the NASDAQ and a pullback in the SP500 and the Dow as well. Once again, though, we saw a strong divergence between the NASDAQ and the other two indices. The NASDAQ fell quickly off the resistance, but the SP500 and Dow did not even manage to fill their gaps.

After hitting support at about 10:00 ET, the market bounced strongly, making odds for a trading range on that time frame going into noon. Since the drop was steep to start with, it also meant that prior highs would serve as strong resistance. In the SP500 and Dow, you can see that they held very well while the weaker NASDAQ held its 5 minute 20 sma resistance zone. It also meant that since pace was still on the stronger than average side, that the morning lows would again be very good support. Since they hit at the same time as the 11:00 ET reversal period, it made for a very nice 2B reversal setup coming off the double bottom for yet another great pivot.

Going into the early afternoon, we started to see things become a bit more choppy. The NASDAQ held the 15 minute 20 sma and the early morning highs perfectly. This time though, it took a bit longer for the pivot off that resistance to follow through. It looked initially like the market would try to hold closer to highs for an upside breakout, but on the smaller time frame charts the pace remained weaker. The SP500 and Dow even formed small Avalanche setups in the form Reverse Cups with Handles after 13:00 ET. This brought the market down to morning lows for the NASDAQ where the price level held perfectly for another pivot. Without strongly volume though, it took a retest of that level before the market was really able to get off its feet for more than a scalp. This created another 2B  in the NASDAQ around 14:15 ET which then picked up pace into the remainder of the day. It continued with a small Bull Flag around 15:15 ET, taking the market into the 5 minute 200 sma resistance where we got our final pivot of the day for a pullback into the close. This was also the 60 minute 20 sma in the SP500 and Dow.

On Thursday, it is looking like we will see more choppy action. The divergence between the NASDAQ on one side and the SP500 and Dow on the other makes it more risky. The NASDAQ looks to be rounding off at lows, wanting to head higher into Thursday, but the SP500 and Dow are at strong 60 minute resistance with that 20 sma. This is more likely to hold initially out of the open. Since this divergence has opposite biases for the indices, I am going to have to wait until intraday to really give me more direction. On the daily charts, all three have room they can move either way, so that time frame does not really help me out much. On the plus side, our CVD is doing great, making new highs so that trailing stops can now be initiated.

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.