Good morning! Wednesday was a nice day of correction in the market. After a week of fairly strong selling, the NASDAQ Composite had ran smack into its 100 day simple moving average support on Monday and Tuesday. This was the larger time frame support level in the market that we had been looking to test for over a week. After rounding off at lows intraday on Tuesday, the market reacted to that support with a decent intraday uptrend that lasted throughout the session on Wednesday.

Among the top news stories of the day, Cisco Systems Inc. (CSCO) posted stronger-than-expected earnings, leading to a large upside gap into the open which helped to boost the NASDAQ. Phizer Inc. (PFE), which has been on the watch list since about a week ago, also came out with more news. It is looking to sell off its consumer products division, which could go for 2.5 times revenues and this gave the stock a strong push throughout the session. By the end of the day it was closing near highs at +$1.19/share. Univision Communications Inc. (UVN) also saw a significantly higher close after confirming its plans to explore a buyout. It's gap was so extreme, however, that it was unable to break past its 30 minute highs. This is pretty typical with this type of news and can make stocks gapping on buyouts, even potential ones, more difficult to profit from intraday on the day that the news hits the wires.

While the market did gap higher on Wednesday, that gap took it right into strong resistance on the 15 minute charts from prior 15 minute highs. In the NASDAQ those highs corresponded with Tuesday's highs as well. It was enough that it was unable to move past that very quickly. Instead the NASDAQ Comp. and S&P500 began to close the gap right away out of the open. The Dow Jones saw a much smaller gap, however, and instead of closing it fell into a base on the 5 minute charts just under the 5 minute 200 sma resistance and on top of the 15 minute 20 sma support. It was able to break higher out of the 10:15 ET reversal period as a result, while the NASDAQ continued to correct intraday with a longer trading range on the 15 minute charts until noon. Only when that index came into its 15 minute 20 sma was it able to break higher.

The mid-day rally took both the NASDAQ and Dow past Tuesday highs. The S&P500 was a bit weaker and only managed to make it back into resistance at the late morning highs on Tuesday. As a whole, the move was about average in terms of pace. This made it more susceptible to a similar decline into the early afternoon. Even though the market corrected a bit more strongly than an average bull flag, however, the 15 minute 20 sma support held and the indices managed to make new highs on the day coming out of the 15:00 ET reversal period. This allowed them to close near their intraday highs.

Heading into Thursday, the daily charts of the major indices are still looking pretty good. We are seeing a larger trading range, which is consistent with our expectations heading into the year. I continue to feel that this market is best suited for shorter term traders as a result of the range, but will be starting to look once more for larger swing and position trades within the next couple of days and heading into next week. I think that overall a lot of stocks are still trying to correct more on the daily charts, however, so a better change in pace to favor upside action intraday would be ideal before I commit too heavily.

Economic Reports and Events
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. 09: AET (B), AG (?), AW (A), AMLN (A), ADI (A), AOC (A), AIV (B), AIZ (B), ALV (06:00 am ET), AN (B), BWA (?), BORL (?), BYD (A), BG (B), CPST (A), CEM (A), CCE (B), CTSH (B), ELNK (07:00 am ET), HGSI (B), LGF (A), MAR (B), MBI (B), MFE (?), MET (A), NFX (B), NFI (A), OSUR (A), PNRA (A), SKYW (?), TELK (?), TRA (?), TQNT (A), TRZ (B), UNTD (A), UTSI (A)
Feb 10: AU (?), ACI (B), CHB (B), CBB (B), CVH (?), ECL (B), IIJI (?), VC (B)
Feb 13: A (?), ANR (B), BRO (A), CD (4:00 pm ET), CMED (07:00 am ET), DDR (A), ENCY (?), GLG (B), HMY (01:00 am ET), IVIL (A), KIM (?), LNCR (A), LNC (A), STO (02:30 am ET), STP (A), ELOS (B), SVM (B), VAL (?), VECO (A)
Feb 14: ANF (A), LEND (B), EYE (B), AEE (B), ACAS (A), BHP (?), CEPH (A), DADE (A), DE (?), DE (?), DQE (B), FTI (A), HL (?), N (B), IM (A), JAH (?), LVS (A), MMC (B), MAS (?), OSI (A), PLAB (A), STR (A), Q (B), RNWK (?), SIAL (A), TRAD (?), RIG (B), UBS (01:00 am ET), UMC (08:00 am ET), WMI (B)
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.