Good morning! It was a rough morning for many market participants on Thursday. The morning began innocuously enough with a slight gap lower into the open. The indices were never able to really show much interest off this opening support level, however, and constantly tested the intraday lows throughout the first hour of the day. By 10:30 ET the bottom gave way.

After more than a week of sloppy trading, it didn't take much of a push to bring in a great deal of selling. Volume increased as the bears managed to create three small, but sharp, waves of selling. These were the most pronounced on the Dow Jones Ind. Ave. While the NASDAQ had the sharpest move initially, the Dow fell in three measured steps on the 2-5 minute charts before moving solidly into 15 minute 200 sma support at 11:30 ET.

All three of the major indices held the 11:30 ET lows heading into lunch. The extent of the morning decline, followed by a gradual base along the lows over noon, didn't allow for a great deal of action throughout the remainder of the session. Typically the market will take 1.5-2 times as long as a trend move took to develop when it comes time for it to correct. When that trend move is at least an average day's range in less than 30 minutes, the correction can take longer before it is able to create a solid continuation move. This made the 30 minutes 20 sma the ideal location for the bears to attempt to return. This didn't quite hit ahead of the close, but the market still managed to end the session near lows.

It is common that a decline such as that experienced Thursday morning will have a difficult time mimicking the prior move on a continuation, even after taking longer to correct from that move. While another selloff can still be stronger than average, the risk is higher that the market will try to break lower in the morning out of the open only to pop back up into the range and put in a better test of resistance before it can attempt to continue the selling. Essentially, it can create a pattern opposite the daily charts we have been seeing in the indices, but applied to 30-60 minute charts. The main catalyst for trading Friday morning is going to come from the early morning economic numbers, starting with the jobs data.

Economic Reports and Events
Feb. 03: Average Workweek for Jan (8:30 am), Hourly Earnings for Jan (8:30 am), Nonfarm payrolls for Jan (8:30 am), Unemployment Rate for Jan (8:30 am), Mich. Sentiment-Rev. for Jan (9:50 am), Factory Orders for Dec (10:00 am), ISM Services Jan (10:00 am)
Feb. 06: -
Feb. 07: Consumer Credit for Dec (3:00 pm)
Feb. 08: Crude Inventories 02/03 (10:30 am)
Feb. 09: Initial Claims 02/04 (8:30 am), Wholesale Inventories for Dec (10:00 am)
Feb. 10: Trade Balance for Dec (8:30 am), Treasury Budget for Jan (2:00 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
Feb. 03: AXL (?), BEAV (B), KTC (2:00 AM ET), MCO (B), MYG (?), NLS (?), R (B), THQI (B), WFT (?), WEN (?), WY (B)
Feb. 06: ATVI (A), APC (A), ANAD (B), CNET (A), DIOD (A), FLS (B), FMC (A), GDI (A), HAS (B), HEW (B), HUM (05:00 am ET), IPS (B), XXIA (A), JP (A), JCOM (?), LPNT (A), LPX (?), NBR (A), NSR (B), PPS (A), GOLD (2:00 AM ET), PYX (A), RCII (A), RSG (A), RYAAY (2:00 AM ET), SPG (B), TIN (B), PFG (A), UDR (A), DIS (?), YUM (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.