Good morning! The market managed to put in a rather substantial move on Thursday, which was one of the largest upside days of the quarter. It didn't start out that way though. The day began with a slight downside gap, followed by continued selling for the first half hour of the day as the market came back into the lows of the range. The indices rounded off at that support on the 1-2 minute charts and pulled higher to close the gap at the 15 minute 20 sma resistance.

The market continued to hold intraday support and resistance levels very well on the 15 minute charts as the indices pivoted off the resistance at 10:30 ET and the SP500 and Dow Jones Ind. Ave. fell back into the morning lows. The NASDAQ showed a great deal of relative strength at this time, holding up around the 5 minute 20 sma support. The SP500 and Dow both formed nice 2B reversal patterns around 11:05 ET, leading to a return to the highs of the day going into noon when the market surged on increasing volume. 
 

The strength of this mid-day rally changed the pace in the market intraday. It turned a range bound day into one with a stronger upside bias. This bias confirmed when the market pulled gradually into the 5 minute 20 sma zone and took off to new intraday highs when the 13:00 ET reversal period hit. This created a third wave of buying on the NASDAQ's 5 and 15 minute charts, hence extending the upside and creating the need for at least a slightly longer correction to break the trend channel. The 30 minute 200 sma had also hit at this time, forming a strong barrier again further upside. The SP500 had not quite hit that same level when the NASDAQ did, so it was able to form a continuation into it at 14:00 ET while the NASDAQ was already worrying about how to correct.

The NASDAQ formed a nice 2T pattern on the 5 minute charts at the 14:00 ET reversal period. Unlike the morning, the afternoon reversal periods held perfectly. The NASDAQ fell back to the prior 5 minute lows, breaking the uptrend channel and creating that larger intraday correction. Initially I didn't think that there would be enough time to see a fourth move before the close, but it triggered coming out of the 15:00 ET pivot lows and took the indices into strong daily moving average resistance at the 20 and 50 day sma in all three indices.

With this three waves trend development, followed by a longer correction and a fourth move, the most likely outcome is a pullback on Friday. There are some early morning numbers that might affect action intraday, namely the 10:00 Chicago PMI. Barring any surprises, however, we should see a retracement of Thursday's session throughout most of the day. Use greater caution since it's liable to be a choppier session.

Updates: Swingtrades: VRTX from the 12th hit targets for those not taken out with a trailing stop into the 10 day sma. UFPI long from Monday will have support at the 20 day sma, while PWAV long from Monday has support at $12.48. FRK from Tuesday also has support at its 20 day sma. 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. 

Economic Reports and Events
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 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.