Good morning! After a day and a half of strong selling, the market put in the rest of a typical intraday trend move on Thursday. Going into the day, instead of continuing the selling right away to put in an equal move on the 30 minute charts, the market fell into a range pretty quickly after an exhaustion move on the 1-2 minute charts about 20 minutes into the day. This showed up with the volume spike on the smaller and larger intraday time frames and opened the door for a consolidation into noon.

This morning consolidation edged gradually higher until the indices struck their 15 minute 20 sma resistance. As you may recall from yesterday, the market tends to put in intraday trend moves for about 2 1/2 days before breaking the 15 minute 20 sma for a larger correction. With the selling beginning over lunch on Tuesday, this move ended day two of downside and the moving average resistance held for a second time, leading to a third wave of intraday selling going into the afternoon.

The downside continuation in the market began with a 5 minute Avalanche pattern as the indices pulled into their 5 minute 20 sma, based on light volume, and then broke lower into 12:30 ET. The indices then corrected into their 5 minute 20 sma resistance which held into the afternoon, forming a bear flag into the 14:00 ET reversal period. From there, volume spiked at lows and the market settled into another 5 minute bear flag which broke lower into the 15:00 ET reversal period to complete three waves of selling on the 5 minute charts since the mid-day breakdown.

We should now see some corrective action on the 15 minute charts that leads to a break in that 20 sma on Friday. Things will likely be pretty slow heading into the weekend. Although the equities market is open for Columbus Day, a lot of folks have the day off, so the odds are higher for the market being more choppy as we end the week and begin the next. Overall I expect a more gradual correction to the selling. Use added caution on both directions on Friday since folks will likely be a little more leery of the market after such a move going into the weekend.

Updates: Position trades: HSP has support at the lows of the weekly bases. I am looking at acquiring NTRS as a position trade buy. It has bounced off the 20 week sma and now needs a daily setup to form. 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
Oct 07:  Average Workweek for Sep (8:30 am), Hourly Earnings for Sep (8:30 am), Nonfarm Payrolls for Sep (8:30 am), Unemployment Rate for Sep (8:30 am), Wholesale Inventories for Aug (10:00 am), Consumer Credit for Aug (3:00 pm)
Oct 10: -
Oct 11: FOMC Minutes (2:00pm)

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
Oct 07: -
Oct 10: AA (A), DNA (A), NGAS (?), PKX (B)
Oct 11: AAPL (5:00 pm ET), GCI (B), LPL (?)

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.