Good day! Thursday was a bit more tricky of a trading day than Wednesday. We saw the pivot type of trades continue with support and resistance levels holding perfectly, but the pivot didn't come with smaller 1-2 minute setups to help with timing. Instead, the pivots were absolute. As the support or resistance hit, they held exactly, even when the move into the support or resistance was a rapid one.

The initial pivot of the day came off trend channel support in the SP500 on the 15 minute charts at about 10:00 ET. This channel support hit as the market came into the zone from the prior afternoon lows. In the NASDAQ it corresponded to the premarket lows in the futures. The reaction was swift, taking the indices back into opening highs with the NASDAQ 5 minute 200 sma intraday and the SP500 and Doe Jones Ind. Ave. 5 minute 20 sma. This time you can see that the divergence between the indices flipped with the NASDAQ showing the best relative strength.

In the NASDAQ the test of highs created a 2T form of double top. With the 5 minute 20 sma just under it though and the market only halfway between the trend channel lines, there was still more room for upside. This meant that if the market didn't react too strongly to the highs resistance, that a 5 minute Phoenix was possible. We saw this trigger around 10:30 ET. It took the Dow into highs from the prior day and the SP500 into the upper trend channel line for larger time frame resistance than the prior intraday highs were. This created odds that it would lead to another pivot. Pace into it was very strong though, so the risk was that the market would fall into a range instead of pull back strongly. If it did pull back strongly, it meant the formation of a triangle since we had already seen several comparably strong waves of buying and selling.

After pivoting, pace picked up and took the market back to prior 5 minute lows. These hit with the 11:00 ET reversal period and held the trend channel support, leading to another smaller pivot into lunch. With lunch approaching quickly, the odds on new pivots began to decrease after the market hit resistance on the 5 minute charts around 11:30 ET. It was about then that I took off for lunch since it was unlikely that we would see action pick up again until after 13:00 ET due to the triangle formation.

Going into the afternoon the market was forming a descending triangle. Action became very very choppy and volume very light. Out of the 13:00 ET reversal period the market was looking like it was forming a low level base within the triangle for a breakdown. The problem was that it was hugging the 5 minute 20 sma. Due to this, I wanted to see a smaller 2 minute base to be willing to take a Bear Flag. Otherwise a shallow Phoenix was more likely and these tend to pick up pace significantly and follow through very quickly and strongly. As you can see, we never got the smaller base. The 5 minute 20 sma continued to hug and around 13:30 ET the Phoenix triggered. This set up a new intraday uptrend and the market took off. We saw several continuation moves with the last one I following coming out of the 15:00 ET reversal period, taking the market into the 15 minute 20 sma just before the close.

On Friday the market has potential for forming a 15 minute Bull Flag for more upside, but the NASDAQ has pretty strong intraday resistance from 22nd highs and the 30 and 60 minute 200 sma resistance. There are no patterns forming intraday at this time except that there is room for a correction off the resistance that hit into the close. This is what I would have looked for had it not been the close when that resistance hit. CVD is still looking pretty good after a slow start Thursday morning. The main support levels have held with the 20 day sma, 15 minute 200 sma, gap from Wednesday, etc. I would not use a trailing stop lower than a break in the 20 day sma at this point though. CVD might fall into a base for a few trading days before it can break higher, but it should hold this support zone. AFFX is starting to come back into interest. This was initially on Tuesday's watch list.

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.