Good morning! The market resumed its bias for strong moves up and down on the 120 minute charts on Wednesday with a continuation to the prior afternoon's rapid decline. A solid intraday selloff took the indices back to Monday's lows in the NASDAQ Composite and beyond in both the S&P500 and Dow Jones Industrial Average by the end of the day on what would turn out to be a strong downtrend day.

The session began gradually. After the drop on Tuesday, the market had pretty much filled the prior morning's upside gap. Yesterday began by completing that action with a bit of selling out of the open. The 5 minute charts were rather extended due to the sharp move, however, and traders soon saw some corrective action come into the market. Over the next hour, the NASDAQ and S&P500 fell into triangle formations on the 5 minute charts, giving us that rest we were looking for early one in the day.

Both the S&P500 and the NASDAQ were able to drop to new lows intraday until the 11:00 ET reversal period hit. At that point the S&P500 and Dow ran into Monday lows, while the NASDAQ was at its 15 minute 200 sma intraday. The Dow had also came back into its lows on the session and all of these support levels, combining with the reversal period, helped to guide the market into a longer intraday correction over noon.

The strength of the morning decline created a very slow market over lunch. As the range at lows narrowed, the volume declined. Both of these contributed to a bearish bias for the early afternoon. The market broke lower out of the 13:00 ET reversal period after they hit their 15 minute 20 sma resistance levels. The move off those moving averages led to the third test of lows for the mid-day range. This is the test of support or resistance that breaks the most often, and did so on Wednesday as well.

The S&P500 and Dow led the late day selloff. Once they put in equal move on the 5 minute charts as compared to the decline into the mid-day base, however, the stronger NASDAQ was able to take over. It followed through into the 14:00 ET reversal period with volume increasing to indicate exhaustion as it hit Monday's lows. With the convergence of a lot of support on the 30 minute-daily charts, and the slightly lower lows on the 2-5 minute charts, I decided to call it a day because the odds were greater that we would just chop around into the close. The market did manage to put in a bit more of a correction through price rather than just time by hugging the 5 minute 20 sma and then breaking higher, but it was pretty scalpish action.

Wednesday's move back to prior lows was in line with the expectations of a choppier, range bound correction that we were watching for. Things are looking similar going into Thursday, except that this time the market is at the lower end of the range and has more upside potential into the open.  For swingtrades I have NCI and PWAV as longs, but am still not being very aggressive with daily setups due to the current action in the indices as a whole.

Economic Reports and Events
Dec 08: Initial Claims 12/03 (8:30 am)
Dec 09: Mich. Sentiment-Prel. for Dec (9:45 am), Wholesale Inventories for Oct. (10:00 am)
Dec 12: Treasury budget for Nov. (2:00 pm)
Dec 13: Retail Sales for Nov. (8:30 am), Retail sales ex-auto for Nov. (8:30 am), Business Inventories for Oct. (10:00 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 stock's earnings date 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
Dec. 08: COST (?), CMOS (?), FLE (B), NSM (?), TOL (B)
Dec. 09: PPHM (B)
Dec. 12: COO (A),
Dec. 13: ADCT (A), BBY (?), MATK (A)