Good morning! It had to happen sometime, and on Thursday the market finally saw its first losing day of the new year. This week has been a lot more choppy intraday as the indices toyed with the idea of putting in a larger correction, but it wasn't until the week was nearly over that it finally took place. The day began with another downside move out of the open, similar to the one on Tuesday morning. This time, however, the market never let go of the 15 minute resistance, slowly trudging along it going into the afternoon.

The move lower did manage to correct somewhat off support as the morning progressed, but the upside pace never won out over the pace on the downside action within the range. After pivoting off highs with the 12:00 ET reversal period, the volume in the market dropped off significantly. This continued until just after 13:30 ET when the range gave way altogether and plummeted the market to new intraday lows.

This strong late day selling was just what we have been watching out for over the last couple of days. Volume spiked as the breakdown escalated into 14:00 ET. Upon hitting support at Wednesday's lows in the S&P500 and NASDAQ Composite, the market slowed. A slightly lower low on the 5 minute charts into the 14:30 ET reversal period created enough of a false continuation move that the support level held throughout the remainder of the day. Typically a reversal pattern, that 2B pattern made with the lower low simply fell into a range since the larger intraday time frames were so overbought. This created a very slow and higher risk finale for the session.

We should see that corrective action off this week's highs continue as we head into the extended three day weekend. With the overall strength of many of the weekly and monthly charts, I am not anticipating the correction as a whole to be overly steep, but that it will have bouts of stronger downside moves intraday. The 50 day moving average is the larger daily support I am anticipating hitting over the next couple of weeks. This would put the market back into about the halfway point for this most recent upside, which will also serve as price support. On Friday, use more and more caution as the afternoon progresses since the volume is likely to decline into the weekend.

Economic Reports and Events
Jan 13: Business Inventories for Nov. (8:30 am), Core PPI for Dec. (8:30 am), PPI for Dec. (8:30 am), Retail Sales for Dec. (8:30 am), Retail Sales ex-auto for Dec. (8:30 am), Mich. Sentiment-Prel. for Jan. (9:50 am)
Jan 16:-
Jan 17: NY Empire State Index for Jan (8:30 am), capacity Utilization for Dec (9:15 am), Industrial Production for Dec (9:15 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 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
Jan 13: -
Jan 16: AAPL (A)
Jan 17: ASO (B), CAL (B), INTC (?), MEL (?), SOV (A), WFC (B)

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.