Good day! The market finally began to correct off lows in Wednesday's session. It started with a nice gap up at the open. The market didn't get far with the 15 minute 20 sma overhead in the SP500 and Dow Jones Ind. Ave., but the pullback off the resistance didn't get far. The NASDAQ held prior lows and it didn't take long before the market was hitting new intraday highs. Unfortunately, there wasn't a very strong buy setup for the early morning upside. The strong daily support was the main factor suggesting further upside. The initial rally brought the SP500 and Dow into their 5 minute 200 sma intraday while the NASDAQ came into price resistance at Tuesday's highs as the 10:45 ET reversal period hit.

The market began to base heading into lunch. Volume declined nicely as the indices pulled into their 5 minute 20 sma support. This held very well, triggering a bull flag on that time frame. The indices climbed into the 12:00 ET reversal period when resistance hit once again as the market put in an equal move on the 5 minute charts as compared to the prior rally (shown on the NASDAQ 5 minute chart.) Tuesday highs and the 15 minute 200 sma in the Dow also helped stall the move.

Risk started to increase going into the afternoon. While the market began to form another 5 minute bull flag, the pace within the pullback was stronger on the downside than the upside, making the flag less likely to trigger and more likely to fail if it did. The larger time frame resistance also made for higher risk on new longs. With the strong daily support, however, shorting was also not ideal. We did get some small short setups with moves lower into the 15 minute 20 sma support, but they were choppy and a bit more trying on the nerves. You had to keep your stops wider until the support hit or you would have gotten whipped out.

The 15 minute 20 sma held very well for support. I was looking at the 1490 level in the NQ (NASDAQ EMini) as the support and it hit 1489.5 before bouncing. The NQ holds increments of 5 pretty well (1490, 1495, 1500, etc.), so that can help with targets and timing pivots. We saw the market move higher into the close, but the move remained choppy and I turned in my time card about 45 minutes early since I felt risk would remain high the rest of the day.

On Thursday I am looking for the market to continue to correct off the support from the daily lows. Watch for 15-60 minute bull flags. CVS stops can be kept under Tuesday's lows. XEC has made new lows, as did UNT. Both can have adjusted stops over the highs of the week so far.

Economic Reports and Events
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 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.