Good morning! The market saw a great deal of divergence on Monday as the week kicked off with the continuation of the correction off last week's lows. The intraday action remained on the choppy side, with a lot of overlap an the indices climbed steadily higher on the daily charts. The morning began with a lot of strength in the oil and energy sectors. News of yet another strong storm heading into the Gulf helped them out. With most of these stocks on the NYSE, the Dow Jones Ind. Ave. and SP500 saw the most relative strength out of the open, while the NASDAQ Composite lagged behind. While the other two had it as support, the NASDAQ was held in by its 15 minute 200 sma resistance.

This larger resistance on the 15 minute charts, as well as daily moving averages overhead, helped to stall the market just after 10:00 ET. The pullback from morning highs got off to a slow start, but the pace picked up heading back into morning lows. When the indices hit that support zone, the intraday range began to narrow. This continued into noon when the 12:00 ET reversal period saw the third test of late morning lows and the break in the 15 minute 20 sma support. It was followed by a strong move lower into the middle of Friday's mid-day congestion. Volume increased and the 5 minute 200 sma served as support, alongside Friday's price support.

Initially, the pace of the drop suggested that we had room for a 15 minute bear flag to form intraday. After hitting support, however, the upside pace began to increase. By the 14:00 ET reversal period the market was back to its late morning base. Similar to Friday's mid-day congestion serving as support, the morning trading range served as resistance on the bounce.

The rally was the strongest in the NASDAQ, while the Dow was the weakest, hugging its 15 minute 20 sma on the way higher. It created another divergence in the market. The NASDAQ began to form a 15 minute buy setup by basing at the 20 and 200 sma resistance, while the Dow began to form a 15 minute Avalanche by hugging its 15 minute 20 sma as support. In the end, the NASDAQ's Phoenix won out, mimicking Friday's late day breakout. This was assisted by the larger time frame support on the daily charts. The breakout occurred as the market headed into the 15:00 ET reversal period and continued into the close, at which time the NASDAQ hit equal move resistance on the breakout as compared to the upside out of 12:45 ET.

The market continues to look stronger going into Tuesday. The indices do have some resistance from the trading range that took place on the 60 minute charts from the 6th to the 11th. Like we saw with the intraday action, this can create some intraday corrective action. The 30 minute 200 sma is also overhead and will likely slow things down as it hits. We will be seeing more and more earnings releases starting on Tuesday and this should help create some stronger daytrade setups in individual stocks moving on news.

Economic Reports and Events
Oct. 18: Core PPI for Sep (8:30 am) PPI for Sep (8:30 am)
Oct 19: Building Permits for Sep (8:30 am), Housing Starts for Sep (8:30 am), Crude Inventories 10/14 (10:30 am), Fed's Beige Book (2:00 pm)
Oct 20: Initial Claims 10/15 (8:30 am), Leading Indicators for Sep (10:00 am), Philadelphia Fed for Oct (12:00 pm)
Oct 21: -
Oct 24: -
Oct 25: Consumer Confidence for Oct (10:00 am), Existing Home Sales 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
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 (?)
Oct 19: ABT (B), ACXM (A), AEIS (?), ACL (A), ADS (?), MO (B), ABK (B), AMGN (A), BAC (?), CRUS (A), CIT (B), CNF (?), CMA (B), CAL (?), CBST (A), ET (A), EK (B), EBAY (A), EFII (?), EMC (B), FLIR (B), GD (B), GNTX (B), HAR (A), HON (B), HCBK (B), HBAN (B), ITW (08:00 am ET), RX (B), ISIL (A), IFIN (A), JPM (B), JNPR (?), NITE (?), LEG (?), KRB (B), MOGN (A), NABI (A), NFLX (?), NYB (B), NTRS (?), ODP (B), PMCS (A), PLCM (A), QLGC (A), RDN (A), RBAK (?), SBC (B), STJ (08:00 am ET), SNV (?), TCB (?), NYT (B), VRSN (4:15 pm ET), WM (A)
Oct 20: ACS (??), AFFX (4:00 pm ET), BAX (?), BRCM (A), COF (A), CLS (A), ED (?), CREE (?), CY (B), DHR (B), ELNK (B), LLY (?), EFX (B), FISV (A), F (?), FDRY (A), FSL (A), GNSS (A), GDW (?), GOOG (?), HLIT (A), HYSL (A), ICOS (?), INFA (?), IR (B), XXIA (A), JBLU (B), LH (B), LVLT (?), MCD (B), MEDI (B), MENT (A), MCHP (A), NE (B), NOK (?), NUE (?), OI (?), ONNN (A), OSI (B), PFE (?), PNC (?), DGX (B), RHI (?), ROH (B), SNDK (A), SAP (?), SLM (B), LUV (B), LUV (B), STLD (?), SYNA (A), TLWT (?), TPX (A), TXT (B), BK (B), KO (B), HSY (B), MHP (B), TQNT (?), UPS (B)
Oct 21: AT (B), T (B), CAT (07:30 am ET), ECL (B), HIB (?), HCR (B), MYG (B), RSH (?), SLB (B), ERICY (01:30 am ET), WY (B)
Oct 24: ALTR (4:15 pm ET), ACF (A), ACI (B), ASN (B), ASH (?), ATHR (?), CD (A), CCU (A), CNET (A), FDG (?), TV (?), JCOM (?), JCI (B), KMB (B), LNCR (A), MACR (A), MRK (B), NBR (A), NBIX (?), PTV (A), PBI (A), PCL (A), PLAY (A), RCII (A), SGP (B), SLAB (B), TXN (A), TRI (B), UDR (A), VLTR (A)
Oct 25: ABGX (A), ACE (A), AKS (?), AKAM (A), AW (A), AMX (A), AMTD (B), AJG (A), AT,L (?), AVB (A), BLS (B), BXP (A), BP (02:00 am ET), BNI (B), CHRW (A), CTX (A), CME (B), CHIR (4:45 pm ET), CB (A), COH (?), CA (?), CVH (B), DST (A), DD (B), ESV (?), FFIV (?), FLEX (?), FBR (A), GNW (A), HAL (B), HCA (B), N (?), INSP (A), IP (B), ISSX (A), ISRG (?), KIM (B), LAB (B), LCAV (B), LXK (B), LMT (B), MDG (A), MTH (?), MUR (A), NCI (08:35 am ET), PNR (?), PKI (A), PPP (?), RFMD (?), SEPR (B), SHW (?), SIMG (A), SSTI (A), SIRF (A), SO (B), STM (A), TLAB (B), TIN (B), JOE (B), TMO (A), TUP (B), UPL (A), X (?), WAT (?), WBSN (A)

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.