Good morning! It was another fairly slow day on Tuesday as the bulls and bears alike held the market in abeyance. On Monday the market had fallen into a triangle on 15 minute charts, breaking the channel slightly out of 14:00 ET. I thought perhaps we would see it try another false break before turning as mentioned yesterday, but the market managed to break strongly higher into the open as the index futures freed themselves from a premarket trading range at highs that had begun to form around 7:30 am ET.

For the first half hour or so the indices climbed steadily until striking strong resistance in the form of the 5 minute 200 sma in the NASDAQ Composite and S&P500 and the prior 15 minute highs in the Dow Jones Ind. Average. Initially the reaction was minor, but after rounding off a bit the bulls finally succumbed to the pressure. The increasing pace of the selling made the 5 minute 20 sma support a thing of minor inconvenience as opposed to a strong impetus for a reversal and I looked toward the morning lows and 5 minute 200 sma on the all sessions charts for a stronger and more likely support level.

What I mean by the term "all sessions" is that I am looking at the charts which show the premarket activity in the index futures. I view these moving average levels to be as strong as those that are calculated between 9:30 and 16:00 ET. The 5 minute 200 sma in the NASDAQ Emini (NQ) held perfectly, as did prior lows in the Dow and S&P500 as the morning gap closed.

The overall pace or momentum of both the opening rally and the return to prior lows were very comparable, leading to a higher likelihood of a trading range should the indices react with anything other than a base off the lows. This took place from the time the late morning support hit until the 12:00 ET reversal period. At that point the market slowed its correction off the lows and pulled back into the trend channel support from prior lows.

The upward surges within the range were similar to those of the prior day and had a similar affect on the market. It popped sharply with the 14:00 ET reversal period after the indices had pulled back to the upper segment of the intraday triangle and rushed past it. Also similar was the counter-move, which left bulls and bears alike rather forlorn by the end of the day. Volume throughout the session was pretty decent, but neither side could force a resolution to the range that had begun Monday morning before yesterday's closing bell.

Right now I'm leaning more towards the side of the bears heading into Wednesday because of how the market has been hugging the support levels a bit more closely and surely than at highs. The highs over the last two days have been more erratic, while the lows have favored the trend channel lines better. You can see this the best on the 15 minute chart of the Dow and S&P500. I think that the move will be a lot more gradual than what occurred on Friday, however, and a 2B on the 60 minute charts is a possibility. In terms of the daily charts, there is not a lot of support until the NASDAQ and S&P500's 100 day sma and prior lows.

News Stories of Interest
Disney (DIS) has announced its acquisition of Pixar (PIXR) for $6.3 billion in stock and $1.1 billion in cash. Pixar's Steve Jobs will be taking a sear on Disney's board and become the companies largest shareholder. Pixar shareholders will receive 2.3 shares of Disney stock per share in Pixar. Jobs also serves as chief exec for Apple Computer Inc. (AAPL), which has signed a deal to show Disney reruns on their iPods. Apple has been having a pretty rough time over the past six days and acts like it will be heading into a longer correction at last on the weekly charts, although it should slow the downward pace of that progression a bit over the next week or two unless something unexpected comes up.

In Asia the markets have been posting gains in Wednesday's session. Shanghai proved to be an exception going into the Chinese Lunar New Year holiday. The markets there and in Shenzhen will be closed until Feb. 5th. The Hong Kong Stock Exchange will be closed from Friday until Jan. 25th for the holiday.

Sector News
Gainers on Tuesday were transport stocks ($TRAN), semiconductors ($SOX), Internet companies ($GIN, which had a picture-perfect great upside triangle breakout into 14:00 ET intraday on the 5 minute charts), airlines ($XAL), computer hardware stocks ($GHA), retailers ($RLX) and homebuilders ($HGX - although this put in most of its gains out of the open and sold off the remainder of the day). Among the losers were Pharmaceuticals ($DRG), oil service stocks ($OSX), and networkers ($NWX).

Reminder
As this earnings season progresses, be sure to pay closer attention to when earnings are due for any open positions you may have. While there are exceptions, it can be quite dangerous holding a shorter term position into an earnings announcement.

Economic Reports and Events
Jan 25: Crude Inventories 01/20 (10:30 am)
Jan 26: Durable Orders for Dec (8:30 am), Initial Claims 01/21 (8:30 am), Help-Wanted Index for Dec (10:00 am)
Jan 27: Chain Deflator-Adv. For Q4 (8:30 am), GDP-Adv. For Q4 (8:30 am), New Home Sales for Dec (10:00 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 25: ABT (B), APD (B), ATI (B), ALTR (?), AHC (B), ABC (B), AMTD (?), AMCC (A), ASH (08:00 am ET), ADP (B), AVT (?), BLS (B), BMY (?), ELY (A), CHIR (4:45 pm ET), CRUS (A), CL (?), CNXT (?), COP (?), DRE (A), EXC (B), FIC (A), FBN (?), GD (B), HRS (A), HXL (A), INGR (A), IFIN (A), JNPR (?), KOMG (?), LEA (B), LSI (?), MXIM (A), NYB (B), NCX (B), NVLS (?), PMTC (B), PMCS (A), PLCM (?), PX (B), QCOM (?), ROK (?), SAP (B), SLAB (B), SSTI (A), SWKS (A), SSCC (B), STJ (?), SWFT (A), HSY (B), MHP (B), VAR (A), WLP (06:00 am ET), XRX (B))
Jan 26: AFFX (?), ALK (?), AMGN (08:00 am ET), ANDW (?), T (07:30 am ET), AVID (A), BAX (?), BEBE (?), BDX (B), BOW (B), BRCM (A), BC (B), CAH (B), CAT (B), CLS (?), CELG (?), CPWR (A), ED (?), CY (B), DHR (B), DTAS (A), D (B), DOV (A), DJ (B), EMN (A), LLY (?), ELX (?), EQT (B), FII (4:00pm ET), FDC (?), FDRY (A), BEN (?), GM (B), GNTX (?), GFI (?), HIG (A), HON (B), ICOS (?), NDE (B), INFA (A), IR (B), IDTI (A), IRF (A), JNS (B), KEM (B), KLAC (?), KLIC (B), LSCC (A), LEG (A), LMT (B), LYO (B), MRO (?), MEE (A), MCK (A), MWV (B), MENT (A), ,SCC (?), MSFT (?), MLNM (B), NWL (B), NE (B), NOK (?), ORI (?), OPWV (?), PKTR (A), PLAY (A), POT (?), DGX (B), RBAK (?), COL (B), SNDK (A), SHW (?), SO (B), SYK (A), SU (?), TLAB (B), TEN (B), DOW (B), TSM (08:00 am ET), UIS (B), UPS (B), VSEA (A), VRSN (?), VZ (B), WDC (?)
Jan 27: BDK (B), CVX (B), FPL (?), HAL (?), MAN (B), NUE (?), PG (B), UCBH (?)
Jan 30: ATHR (4:00 pm ET), CHKP (B), CMI (B), EK (B), XOM (?), FISV (A), KFT (A), MAT (B), RSAS (A), SGP (B), SII (B), SYY (?), TSN (B), UNM (A), ZMH (A)
Jan 31: ACE (A), ADPT (?), ASD (B), ARTG (?), CCJ (?), CB (A), CIN (?), CEG (?), CAM (B), COCO (B), CFC (B), CYMI (A), ELN (B), ETR (B), FLEX (A), GOOG (?), HLT (B), ITW (08:00 am ET), RX (B), ISSX (A), JBLU (B), K (B), MRK (B), SEPR (B), SIE (A), SGTL (A), STN (?), SYMC (?), TE (B), ERICY (01:30 am ET), ALL (A), X (?), VLO (?), WYE (?), ZHNE (A)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.

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.