Good morning! Wednesday was a rather unexciting day overall for the market. After opening and moving into the 15 minute 200 sma again, the indices fell back into the trend channel they have been forming over the last week. This held throughout the day. There were a few decent moves within the session, however the initial one out of the open was not one of them. After coming back into the 15 minute 200 sma, the market rounded off at highs with a great deal of chop and overlap from bar to bar which lasted throughout the morning, creating high risk overall at that time.

As the 11:00 ET reversal period hit, the Dow Jones Ind. Ave. pivoted off highs and the market began to favor the lower end of the morning range. Volume dropped off significantly at this time, indicating a lack of interest as the market attempted to correct off the lows of the range. This, combined with the slightly higher highs out of the open to create a rounding affect, led to a bearish bias on the intraday charts. The selling triggered with a small 2-5 minute Avalanche as the indices hugged the 5 minute 20 sma and then broke lower. 
 

The pace of this late morning selloff was some of the strongest we have seen within the range. The market stalled for a few minutes as the gap closed into the SP500's 5 minute 200 sma support. The move continued with the 12:00 ET reversal period to take the NASDAQ back into the lows of the week. Volume spiked, indicating exhaustion, and the market gradually pulled higher into the 5 minute 20 sma where it held the resistance for another test of lows.

The slightly lower low in the NASDAQ and SP going into 13:30 ET created a 2B reversal pattern into the afternoon. It started gradually, but picked up speed with the 14:00 ET reversal period, slowing for only a few minutes at the 15 minute 20 sma before climbing quickly back into the morning trading range and the 15 minute 200 sma. This hit around 14:30 ET and the extreme pace meant that the market would take the rest of the afternoon to correct on a slower pullback or base.

Since we did not break lower on Wednesday, it makes it more likely that our second scenario of a longer daily correction is going to play out. This will mean more of this choppy back and forth action intraday. Watch for the market to start to favor one end of the trading range over the other for a breakout in the direction closest to that end of the range. Use added caution on new swingtrades at this time.

Updates: Swingtrades: VRTX from the 12th hit most trailing stops on Friday. Position trades: HSP and CHRS long have support at the lows of the weekly bases. CHRS stopped out some folks on Tuesday, but is holding the 20 week sma support. I am looking at acquiring NTRS as a position trade buy on upside breakouts from the current range on the weekly chart, but it needs to hold the 20 week sma level to stay on my watch list. HCA as a position trade short from 9/20 hit trailing stops for a swing, but a larger position trade target is in the $43 zone. UFPI long from Monday will have support at the 20 day sma, while PWAV long from Monday has support at $12.00. FRK from Tuesday also has support at its 20 day sma.

Economic Reports and Events
Sep 29: Chain Deflator-Final for Q2 (8:30 am), GDP-Final for Q2 (8:30 am), Initial Claims 09/24 (8:30 am), Help-Wanted Index for Aug (10:00 am)
Sep 30: Personal Income for Aug (8:30 am), Personal Spending for Aug (8:30 am), Mich. Sentiment -Rev for Sep (9:45 am), Chicago PMI for Sep (10:00 am)
Oct 03: Construction Spending for Aug (10:00 am), ISM Index for Sep (10:00 am), Auto Sales for Sep (12:00 am), Truck Sales for Sep (12:00 am)
Oct 04: Factory Orders for Sep (10:00 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 29: FDO (B), PEP (B)
Sep 30: -
Oct 03: CMGI (A), MOS (B)
Oct 04: -

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.