Good morning! Thursday's action had a lot in common with the day before. Both of the biases we were seeing heading into the day played out in turn. The smaller bearish pattern on the NASDAQ broke lower into the morning while the market turned around again over noon. This led to the larger upside breakout we had room for on the SP500. Once you break it down though, there were also a number of differences.

Like Wednesday, the day began on Thursday with a pretty flat open. Within 15 minutes the market was once again heading lower, breaking down out of the low level base that took place into the prior day's close. This time the selling was a bit more rapid, however, with it moving swiftly back into the prior 15 minute lows going into the 10:15 ET reversal period. It had more room to cover than on Wednesday to get to that support level, but it held just as well. Since it fell more quickly this time, it took longer to round off at the support before turning around over noon.

Initially I didn't think we would end up getting the mid-day reversal. Due to the fact that it takes a lot longer to get a decent price correction off lows when the move into them is faster than average, the odds are also higher that you just see a range that then breaks down to continue the initial, stronger move. In this case, that meant potential for a trend day down. Instead of falling into a base out of the 10:15 ET reversal period on the 5-15 minute charts though, the NASDAQ tried to continue the move too early. This led to a 5 minute 2B since the move just served to flush out bulls from the prior pivot with a very slightly lower low. This held and turned the pace around going into the second half of the morning, resulting in a more rapid move up into the 5 minute 20 sma resistance than we would have seen had the market just climbed off the 10:15 ET lows.

The change in pace coming off the 10:45 ET pivot low was not enough in and of itself to create a strong afternoon rally. The market could have just as easily have fallen back to lows to turn the pace around again within the range. The reaction from the 5 minute 20 sma resistance, however, was slower than the move into it. This aided in the change of pace to favor the upside when it hugged that resistance level on light volume and then broke higher. From that point on, all the attempts to move to the up side were more rapid than the corrections off the smaller 2-5 minute highs. Once the 15 minute 20 sma resistance broke, it became more difficult for the bears to be able to take back the lead and we saw the market really start to pick up speed out of the 13:00 ET reversal period. Volume also increased to confirm the break in the 15 minute 20 sma resistance and assist in the 60 minute range breakout.

Unlike the move out of 12:00 ET on Wednesday afternoon, the market didn't try to round off at the highs after it surged on Thursday out of 13:00 ET.  Since we'd already had a fairly well developed range on the 60 minute charts, it was also less likely that we would see the same pullback in price as we did Wednesday. This confirmed when the market put in another small, but solid base at highs out of the 14:00 ET reversal period without any rounding off in the form of slightly higher highs. As a result, after that move I was no longer willing to try to do anything with the futures since the extension intraday made it more likely that new highs would be by less and less, but it was also unlikely that we'd see any strong reversal, even on a smaller time frame. I've seen too many people over the years try to short that type of move, especially when it does reverse the day before. The main difference was that this one was a breakout from prior highs on all three of the major indices and also a much greater intraday move.

The breakout Thursday on the 60 minute charts does still have room for more upside. We will need to watch out for prior highs on the weekly charts from a few months back. Also, since we saw the market run so strongly into the close, we run the risk of a correction intraday on Friday. At present, I am not expecting it to be a strong one. Given the upside pace, which was similar to the pace on the 28th of Oct. and 2nd of Nov., the market will tend to want to correct more gradually off resistance unless we se something like we had on the 5 minute at lows on Thursday. This time it would form on a 15 minute charts in order to show any rounding off an changing of pace at highs for a reversal.

Economic Reports and Events
Nov. 11: -
Nov. 14: -
Nov. 15: Core PPI for Oct. (8:30 am), NY Empire State Index for Nov. (8:30 am), PPI for Oct. (8:30 am), Retail Sales for Oct. (8:30 am), Retail Sales ex-auto for Oct. (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
Nov. 11: PDA (?)
Nov. 14: A (A), BGO (A), BLI (?), BIZ (?), ERJ (B), LOW (?), TSN (?), WMT (?)
Nov. 15: ANF (A), AEOS (B), ADI (A), ARM (B), BJ (B), CNR (?), DKS (B), HMA (B), HD (B), JCP (?), LZB (A), ROST (B), SPLS (B), TJX (B), VOD (?)

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.