Good morning! After several weeks of strong selling, the market finally saw a higher close in the NASDAQ on Thursday. The day did not get off to a positive start though. The indices fell into a narrow choppy range again out of the open, bouncing off the 9:45 ET reversal period to retest the prior afternoon's closing highs before rounding off and selling off very quickly back into the lows in the latter half of the morning. The pace was on the strong side with the NASDAQ holding up the best. While the SP500 and Dow Jones Ind. Ave. both made significantly lower lows intraday, the NASDAQ hit its prior lows going into the 12:00 ET reversal period. These combined to form a correction over noon.

The reaction to mid-day support started slowly, turning over when the indices made slightly lower lows just before 12:30 ET to form small 2B reversal patterns. This allowed for an increase in the pace of the correction off lows and the market pulled rapidly back into the morning breakdown levels. This was the 15 minute 20 sma in the SP500 and Dow and the prior highs intraday in the NASDAQ as well. It was here that we finally saw the pace turn over intraday in the market to allow for a greater correction on the 60 minute and daily charts.

After the strong bounce off lows, the market slowly pulled back with declining volume into the early afternoon. The light volume meant a lack of eager sellers. In the NASDAQ the correction held the 15 minute 20 sma support level, forming a reverse Head & Shoulders pattern while the SP500 and Dow formed double bottoms. These reversal patterns triggered heading into the 14:00 ET reversal period.

The indices stalled initially after putting in an equal move on the 5 minute charts as compared to the 2B bounce into 12:30 ET. This hit as the NASDAQ ran into its 5 minute 200 sma and the SP500 retested prior 5 minute highs. After only a brief reprieve, the buying picked up again to take the SP500 and Dow into their own 5 minute 200 sma resistance, as well as morning highs. This moved exhausted the market and it spent the rest of the day correcting with a choppy range into the close.

The intraday range going into Friday is not quite long enough for a strong upside continuation breakout, but it's a good start. If the indices can continue to hold this zone for the first hour or so, it will form a great buy setup. It's going to have to deal with a lot of premarket economic releases though. Overall I expect to see a greater daily recovery into next week as the market reacts to the prior two weeks of downside.

Economic Reports and Events
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. 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.