Good morning! As the week progresses, the market is still trying to make up its mind as to which direction it truly wishes to follow. Although the day ended lower, with the Dow down 32.89 points, the SP500 down 5.16 points, and the NASDAQ Composite losing 9.40 points, the morning started off on a much more positive note. Despite a slight gap down into the open, the indices began to rally shortly thereafter. The first mild resistance was the prior afternoon's highs, but this stalled the move only temporarily before the bulls broke through that level and moved upward into Tuesday's highs.

The pace of the rally began to fade as the indices ran into the prior day's price resistance. After pulling back quickly into the 5 minute 20 sma support, it became more difficult to break the prior intraday highs with the subsequent bounce and we started to see rounding off on the 5 and 15 minute charts. This meant that each new high was having a harder time breaking than before, creating a hilltop formation. After one last ditch effort shortly before 11:30 ET, the 5 minute 20 sma gave way. Since the late morning highs actually broke Tuesday's highs by a hair, this mid-day reversal triggered a form of double top called a 2T.

The pace of the selling picked up steadily until the market hit prior 5 minute lows with the 12:00 ET reversal period. This was also the 15 minute 20 sma in the NASDAQ. The reaction was slight, however, holding the 5 minute 20 sma resistance to create another move lower. This took place more quickly than you typically will find in order to create strong follow through, so this new breakdown did not get far before pulling back up into the 5 minute 20 sma to allow for a larger breakdown pattern into the more significant 13:30 ET reversal period.

Before long the NASDAQ was making new lows on the day. The Dow had the most relative strength, but it also succumbed to the selling pressure. The indices found support just before 14:00 ET in the form of both price and moving average support on multiple time frames. The Dow hit its 5 minute 200 sma, while the SP500 came into 60 minute 20 sma support and the NASDAQ came into the zone of its prior day's lows. The one thing really lacking at this pivot low was strong volume. Without it, it is more unlikely that the market will see a larger reversal. As a result, the indices fell into a range for nearly two hours, holding the 15 minute 20 sma resistance, before being hit with more downside in the last half hour or so of the day.

The NASDAQ is looking the more susceptible to more selling on Thursday, but all three indices have room to move lower at this point given the reversal off morning highs. The overall pace is not really much stronger yet than the upside had been, however, so I would urge greater caution. At the moment, due to earnings season, we are seeing a good number of nice reaction plays to the news. This is where my focus has been for the most part this week and will probably continue to be for the remainder of the week.

Economic Reports and Events
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 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)
Oct 28: ABB (?), AFR (?), APC (B), ADM (B), AVP (?), BHI (B), BC (B), CHKP (B), CVX (?), CEG (?), COCO (?), NOV (B), PEG (08:45 am ET)
Oct 31: CHK (A), CTSH (B), GGP (A), HMY (?), HUM (5:00 am ET), NDE (B), K (B), MVSN (A), NLC (A), NR (?), OXY (?), OIS (A), REG (A), SYY (?), PFG 8A), VLO (?), GRA (?), XL (A)
Nov 01: LEND (B), AIV (?), AXS (A), ITU (?), BJS (B), CCJ (?), CEPH (A), CHTR (B), CMS (B), CL (B), CNCT (?), CEI (B), EDS (A), EMR (?), ETR (?), EOP (B), EQR (B), EXPD (B), FTI (A), FPL (B), HNT (B), INCY (B), KFRC (A), MBI (?), MHS (B), PNRA (A), PKD (?), PFGC (?), PLT (A), PRTL (A), PLD (B), PDLI (A), Q (B), RRI (B), RDC (?), SUNW (?), SYMC (?), TXU (B), URI (B), UNM (A), VCLK (4:05 pm ET), VNO (B), ZBRA (?)

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.