Good morning! The market continued to take a break from its recent upside move on Tuesday. The day began with a strong open though, following through on the bullish morning bias we were looking at Monday night. It kicked off with a decent gap into the mid-day price resistance from Monday's 12:00 pivot highs. That held the gap initially, but it broke again to the upside out of a premarket base when the 10:00 ET economic numbers came out and took the Dow Jones Ind. Ave. back into the highs from last week.

The reaction to the Consumer Confidence and New Homes Sales data was short-lived. Within just a few minutes the selling picked up and took the market back to opening levels. The market formed a 2 minute Avalanche pattern before breaking morning lows and pulling in to fill the morning gap on the NASDAQ. This support level hit at the same time as the SP500 and Dow Jones Ind. Ave. came into strong support from Monday's afternoon congestion and their 15 minute 20 simple moving averages. The 10:45 and 11:00 ET reversal periods also helped stall the selloff going into lunch and the market corrected pretty quickly off lows, making a range into the afternoon most likely.

The indices managed to bounce back into the opening range once more. That morning support served as resistance and was also between a 50% and 60% retracement off morning lows. By pulling up 50% or more, it makes the prior lows intraday support and harder to break the first time they are retested. This supported the odds of a range into the early afternoon.

Even though the market did hold those lows initially around 12:0 ET, they managed to break with the 13:00 ET reversal period after only a brief correction from the second retest. This next wave of selling was similar to the initial drop from morning highs. From the 12:45 ET highs, all three indices managed to put in equal moves as compared to the morning decline. That equal move is a significant price support level when the pace on both segments is similar. In this case that price support also hit at the same time as the larger equal move on the NASDAQ as compared to Monday, as well as the price support from the closure of the SP500's morning gap. This set the ground work for another correction off lows.

That late day correction got off to a strong start with a nice pivot into the 5 minute 20 sma. It continued after pulling back into the lows to create a 2B double bottom in the Dow. The slightly lower low served to trap shorters and flush out earlier pivot traders hoping for a larger move with too tight of a stop. As a result, it allowed for a very strong bounce out of 14:30 ET that took the market back to the 15 minute 20 sma resistance intraday and the mid-day congestion zone before turning back over and moving lower once more into the close.

Going into Wednesday, I am anticipating this correction from last week's highs to continue throughout the remainder of the week. Since we are still having strong upside moves intraday and from day to day since Friday though, it is kicking off with a much choppier, range-bound correction. It is pretty normal given the upside strength for a correction to begin more slowly. The NASDAQ, which participated the least last week, has the easiest time giving back gains as a result. It's 20 day moving average will serve as the next main daily support level.

Economic Reports and Events
Nov. 30: Chain Deflator-Prel. for Q3 (8:30 am), GDP-Prel. for Q3 (8:30 am), Chicago PMI for Nov. (10:00 am), Crude Inventories for 11/25 (10:30 am), Fed's Beige Book (2:00 pm)
Dec. 1: Auto and Truck Sales for Nov. (12:00), Initial Claims for 11/26 (8:30 am), Personal Income and Personal Spending for Oct. (8:30 am), Construction Spending for Oct. (10:00 am), ISM Index for Nov. (10:00 am)
Dec. 2: Average Workweek, Hourly Earnings, Nonfarm Payroll, and Unemployment Rate for Nov. (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. 30: TIF (B)
Dec. 1: DLM (?), FNSR (A), SYNC (acquired by NOK) (A), NOVL (A), OTVI (A),
Dec. 2: -

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.