Good day! After some initial bullishness, the market gave way to the intraday selling bias on Tuesday. The day started with a downside gap though, leading to a small range initially before the indices pulled higher into Monday's highs and price resistance. This held very well, leading to a perfect pivot off the 10:45 ET highs. The correction got off to a slow start though because the rally into resistance was on the rapid side.

The late morning correction began most quickly in the NASDAQ, but all three indices formed 5 minute Avalanche patterns as they began to base along support on the 5 minute charts at the 20 sma. As this broke it led to a second wave of selling. It took a some time to get going as the indices reacted to support that was near at hand before finally breaking free into the early afternoon. The selling then continued with a 5 minute bear flag at the 13:00 ET reversal zone, leading to a retest of morning lows.

At this larger time frame support I was expecting a more significant correction than we saw. The pace was never able to turn over though to lead to a decent bounce. Instead the market based at lows to create a 5 minute bear flag, leading to even further selling into the afternoon with the 14:00 ET reversal period. This drop saw a greater increase in volume though, leading to an exhaustion move and larger correction into the 5 minute 20 sma. The rapid rally into this resistance level led to a slower drop into the close and the market was not able to significantly break the prior intraday lows before the end of the day.

On Wednesday I plan on being very cautious on new shorts, even intraday. We don't have a reversal pattern just yet, but daily charts are still extended on the downside so I remain more scalpish in terms of shorts. CVS hit its 20 day sma on Tuesday. That needs to hold to remain valid. XEC and UNT still look good though on the short side. UNT has the least support to deal with.

Economic Reports and Events
Mar 30: Chain Deflator-Final for Q4 (8:30 am), GDP-Final for Q4 (8:30 am)
Mar 31: Initial Claims 03/26 (8:30 am), Personal Income for Feb (8:30 am), Personal Spending for Feb (8:30 am), Chicago PMI for Mar (10:00 am), Factory Orders for Feb (10:00 am), Help-Wanted Index for Feb (10:00 am)
Apr 01: Average Workweek for Mar (8:30 am), Hourly Earnings for Mar (8:30 am), Nonfarm Payrolls for Mar (8:30 am), Unemployment Rate for Mar (8:30 am), Mich Sentiment-Rev. for Mar (8:30 am), Construction Spending for Feb (10:00 am), ISM Index for Mar (10:00 am), Auto Sales for Mar (12:00 am), Truck Sales for Mar (12:00 am)
Apr 04: -
Apr 05: ISM Services for Mar (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 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
Mar 30: BBY (B), KMX (B), CC (B), NRG (B), RI (A
Mar 31: AGE (B), CRDM (A), COGN (A), KRY (?), RHAT (?), MOS (?)
Apr 01: -
Apr 04: -
Apr 05: RIMM (A)

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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.