Good morning! The market is having a great deal of fun as it continues to correct off last week's lows. Despite the huge upside intraday on Wednesday, it was not as generous on Thursday. The morning was rather slow and we saw the congestion which is typical following such a large intraday move. There were some slightly higher highs early on in the day, but after the 9:45 ET reversal period things began to turn around.

Even though we continued to see divergence in the market intraday, with the Dow Jones Ind. Ave. holding up better than the NASDAQ Composite and SP500, they all began to form reversal patterns on the 5 minute charts going into the 11:00 ET reversal period as they hugged the 5 minute 20 sma zone. The Dow made slightly higher highs while the SP500 and NASDAQ based closer to intraday lows. The Dow pattern was a type of double top called a 2T, which is the pattern I suggested in yesterday's column as one to turn Wednesday's move around. The slightly higher high traps bulls, but the slower upside pace after a great deal of buying already doesn't allow the move to sustain itself. The NASDAQ and SP formed Avalanche patterns by hugging the support near lows. Both triggered when the trend channel from the 10:15 ET move higher into about 11:00 ET broke lower.

The selling continued into lunch with a bear flag on the 5 minute charts, leading to lows again at noon. This time the NASDAQ held up the best, but all three hugged intraday lows after three waves of selling on the 5 minute charts. The correction was longer coming out of that trend move, which is the most common. The volume was light on this correction, however, suggesting that we would still see more selling into the afternoon. This picked up coming out of the 14:00 ET reversal period when the market dropped once more to new intraday lows. The Dow hit its 15 minute 200 sma support while the SP500 hit the 15 minute 200 sma intraday. This stalled the market once more for another correction to the selling.

Once again the indices hugged support on declining volume. As they came into their 5 minute 20 sma zone, they held the lower end of their 2 minute ranges. They broke down when the 15:00 ET reversal period hit. Since each wave of selling had been picking up pace throughout the day, this last move was the strongest yet. It was only on this move that we saw exhaustive volume on the 15 minute charts as it spiked with the market coming into stronger price and moving average support on the larger time frames. The SP500 and Dow both managed to drop into the zone of Friday lows while the NASDAQ came back into Tuesday's trading range. This exhaustion allowed for a bit of a correction again into the last half hour of the day.

Even though the selling was very significant on Thursday, the market seems to have more room that it can drop on Friday. The Commodity Channel Index is at about zero on the three indices and -200 is oversold when the period for the indicator is set at 15. The pace of the selling and the fact that it increased throughout the day puts it in a different light than the prior day's rally where the buying was pretty steady throughout. We will need to see the pace of the selling slow down before we are likely to see a larger correction intraday. This means that there is still room for some more downside into the morning, but after that the risk will typically increase, especially since we'll be heading into the weekend. It will make a late day trading range more probable.

Economic Reports and Events
Oct 21: -
Oct 24: -
Oct 25: Consumer Confidence for Oct (10:00 am), Existing Home Sales for Sep (10:00 am)
Oct 26: Crude Inventories 10/21 (10:30 am)
Oct 27: Durable Orders for Sep (8:30 am), Initial Claims 10/22 (8:30 am), Help-Wanted Index for Sep (10:00 am), New Home Sales for Sep (10:00 am)
Oct 28: Chain Deflator-Adv for Q3 (8:30 am), Employment Cost Index for Q3 (8:30 am), GDP-Adv for Q3 (8:30 am), Mich Sentiment-Rev for Oct (9:45 am)
Oct 31: Personal Income for Sep (8:30 am), Personal Spending for Sep (8:30 am), Chicago PMI for Oct (10:00 am)
Nov 01: Construction Spending for Sep (10:00 am), ISM Index for Oct (10:00 am), Auto Sales for Oct (12:00 am), Truck Sales for Oct (12:00 am), FOMC policy announcement (2:15 pm)

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 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)
Oct 26:  AGR (B), APD (?), ATI (B), MDRX (A), AHC (?), AHM (?), APCC (A), AMKR (A), APPB (A), AMCC (A), ARBA (A), ARRS (A), ADP (B), AVX (B), BIDU (A), BLDP (B), BEAV (B), BIIB (A), BOW (B), CDN (A), ELY (A), CAH (B), COGT (A), CYH (A), COP (B), GLW (A), CSX (?), DCX (?), DO (?), DBD (B), DRIV (A), DRE (A), ECA (?), EPD (?), ERES (A), ESRX (A), EXTR (A), GRMN (B), GMR (A), GRP (B), GW (A), HRS (A), IDXC (B), JNS (B), JNY (B), KMG (?), KOMG (A), LLL (B), LEA (B), LPNT (A), LPX (?), LSI (A), LU (?), MXO (A), WFR (?), MGM (B), MCRL (A), MNST (B), NTGR (A), NEM (?), NSC (?), OMX (?), OPWV (?*), PFCB (1:00 pm ET), PDG (A), PLUG (B), PX (B), PHM (A), RAI (B), R (B), SEE (?), SII (B), SSCC (B), S (B), HOT (B), TROW (B), TASR (B), TMX (A), BA (B), EL (B), FAF (B), NDAQ (A), TRID (A), UMC (?), VAR (A), VRTX (A), WC (A), WLP (06:00 am ET), WWY (?), XEL (B), YCC (B), ZMH (A)
Oct 27: AET (B), AAI (B), ALA (?), AEE (B), AXL (B), AMMD (A), ANDW (?), AU (?), APA (B), ABI (B), AZN (?), AN (B), AVID (A), AVT (?), BLL (B), ABX (A), BEBE (?), BDK (B), BG (B), BR (A), CTL (B), CRDN (B), CIN (B), CCE (B), CTV (A), CPWR (A), CNXT (A), CFC (B), ELN (B), ELX (?), XOM (?), BEN (?), FMT (B), GGC (A), GP (B), GSK (07:00 am ET), GR (B), HC (?), HLT (B), IMCL (B), IM (A), IRF (A), IVGN (A), ITT (?), KLAC (A), LEXR /A(, LIZ (?), LTR /B(M LYO (B), MRO (?), MEE (A), MXIM (A), MFE (A), MWV (B), MET (A), MSFT (?), MCEL (?), MLNM (?), NCR (B), NXL (?), NWL (B), NFX (B), NXTP (B), NXG (A), OLN (A), PHS (B), PRX (B), PTEN (B), PENN (07:00 am ET), PD (B), PGN (B), QLTI (B), STR (A), RTN (B), RNWK (?), RSAS (A), SAPE (A), SPG (A), SKM (05:00 am ET), SNE (B), SWN (A), STA (B), SU (B), TKLC (A), TNE (B), TRA (B), DOW (B), THQI (A), TDW (B), TSM (08:00 am ET), UNP (?), UHS (A), UST (B), VSEA (A), VZ (?), VTSS (A), VMC (A), WLT (?), WMI (B), WFT (B), WEN (?), WDC (A), YELL (A), ZHNE (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.