Good morning! Even though we continued to see more choppy action overall on Wednesday, the directional bias was stronger once again. Out of the open the indices moved higher, heading back into the upper end of the recent trend channel. As soon as the 5 minute 200 sma hit in the SP500, the market turned over, selling off into Tuesday's. The Dow Jones Ind. Ave. had the most relative strength and as soon as it hit the prior day's lows it helped stall the rest of the market, even though the NASDAQ and SP500 were able to make new lows on the week.

The market corrected coming out of the 11:00 ET reversal zone by pulling up into its 5 minute 20 sma resistance. Even though the pace on this move was decent, the market reacted strongly to the moving average by rounding off on the SP500 and Dow and dropping quickly to new lows heading into the 12:00 ET reversal period. This is the strongest mid-day reversal zone and held very well, leading to a pivot on strong volume. It pulled the market back into the 5 minute 20 sma and then helped to move it into the 15 minute 20 sma.

The upside move held this larger time frame resistance and quickly dropped back into the lower end of the trend channel that had been created out of 12:00 ET. It then based along that level on the 2-5 minute charts (as shown in red) and broke lower, triggering another 15 minute bear flag setup into the afternoon. This move as a whole was a bit more gradual than the prior drop and the market only barely broke the prior lows when it exhausted on another volume spike just before 14:30 ET. This led to a 2B on the 15 minute charts, but this type of double bottom was not strong enough to break the larger downtrend. It was enough to take the market back into the 15 minute 20 sma before the close though.

The market continues to look more bearish on the daily and weekly charts, despite a great deal of selling already. While volume is starting to pick up, indicating exhaustion coming in on the shorter term charts, the pace in the market is still more bearish. This means that the upside moves are occurring at a slower speed than the downside ones. In order to see a strong correction to the selling, that has to start to turn around.

Updates: Position trades: HSP has support at the lows of the weekly base. 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. 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. With the longer term bias, I will start to just update these as they progress. At this time I am not doing much for new swingtrades and am instead focusing more on intraday activity.

Economic Reports and Events
Oct. 13: Export Prices ex-ag. for Sep (8:30 am), Import Prices ex-oil for Sep (8:30 am), Initial Claims 10/08 (8:30 am), Trade Balance for Aug (8:30 am), Treasury Budget for Sep (2:00 pm)
Oct. 14: Core CPI for Sep (8:30 am), CPI for Sep (8:30 am), Retail Sales for Sep (8:30 am), Retail sales ex-auto for Sep (8:30 am), Capacity Utilization for Sp (9:15 am), Industrial Production for Sep (9:15 am), Mich Sentiment-Prel for Oct. (9:45 am), Business Inventories for Aug (10:00 am)
Oct. 17: NY Empire State Index for Oct. (8:30 am)
Oct. 18: Core PPI for Sep (8:30 am) PPI for Sep (8:30 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
Oct. 13: FCS (B), BPOP (A), TRB (B), WGO (B)
Oct. 14: BBT (B), FDC (?), GE (08:30 AM et), MI (B), NGAS (?), RF (B), UNH (B)
Oct. 17: AEP (?), C (B), CCK (A), ETN (B), FHN (B), GM (08:00 am ET), HAS (B), LSS (A), MDC (A), MAT (B), NVLS (A), OMM (A), RMBS (?), PHG (?), SVU (B), TMA (A), WB (B)
Oct. 18: MMM (B), ADTN (B), ASD (B), ASO (B), BSX (B), BCR (A), CNI (?), CDWC (?), CHB (A), CYMI (?), FITB (B), FRX (B), FCX (?), GENZ (B), GILD (A), GAP (?), INTC (?), JNJ (B), KEY (?), KFT (A), LLTC (A), MEL (?), MOT (A), NCC (B), NVS (?), PH (B), RYL (A), SAFC (07:45 am ET), STX (A), SOV (A), STT (?), STN (?), SYK (A), STI (B), TER (A), CAKE (A), USB (?), UTX (B), WFC (B), YHOO (?)

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.