Good day! I hoped you all fared well in on yesterday's strong intraday reversal action. The market actually had some great intraday patterns and followed technical indicators extremely well. The day started out as the bear flag we were looking at on the longer intraday charts from the base on the 11th broke lower into the open. The started with a small gap down and continued immediately with more selling. At about 10:00 ET we saw a bear flag form which continued the selling, albeit to a lesser degree in the NASDAQ.

Since the NASDAQ had dropped the quickest on the first wave of selling and bounced more than the other two indices off 10:00 ET lows, It formed a 2B double bottom heading into the 11:00 ET reversal period instead of making more significant lower lows like the SP500 and Dow Jones Ind. Ave. All three indices held the price support from the trading range from the 1st and 4th.

Volume dropped off significantly again over noon on Tuesday as the market hugged the lows. The NASDAQ held it the best and hence created the strongest Bear Flag pattern on the 15 minute charts into the 13:00 ET reversal period. It fell initially to the morning lows, where it then based for about 30 minutes before breaking quickly to new lows. Support hit as it put in an equal move as compared to the prior drop from the morning selloff. The SP500 and Dow sold off a great deal more gradually, however, making it much easier to rally into the afternoon.

The market as a whole was getting very extended on the downside intraday going into the afternoon. Typical intraday trend moves rarely last more than 2 1/2-3 days without breaking the 15 minute and 30 minute 20 simple moving averages. That put the selloff into the afternoon right into that time limit. This made the market a great deal more susceptible to the Fed news that came out with the 14:00 ET reversal period.

At 14:00 the summary for the latest Federal Reserve meeting came out. While it looked negative at first glance, it showed no increase in inflation concerns and calmed worries over a more aggressive interest rate hikes. With the market poised on the edge of an upside correction, this typically low-impact report sent the market careening higher into the close. As with any unexpected news event, the first small Bull Flag gave a high probability buy setup around 14:40 ET. The NASDAQ managed to put in nearly an equal move as compared to the initial rally. Risk increased significantly though into 15:00 ET as the SP500 came back into the zone of highs on the daily charts, making a second attempt at a Bull Flag very scalpish and leading to only slightly higher highs into the 15:30 ET reversal period.

MRK from the $32-$32.25 zone made new highs again Tuesday afternoon. Use a trailing stop no lower than the 50 day moving average. DG is also still very interesting for an upside breakout later on this week. In the market as a whole, the futures look like they might break even further to the upside Wednesday morning. The 50 day moving average in the NASDAQ is the next main resistance level, near the highs of the range from the past three weeks. With the extreme upside already intraday, however, I would look more towards daytrading. The market was pretty extended intraday by the close and hence the market is likely to have a more narrow range day as a whole.

Economic Reports and Events
Apr 13: Retail Sales for mar (8:30 am), Retail Sales ex-auto for Mar (8:30 am)
Apr 14: Business Inventories for Feb. (8:30 am), Initial Claims 04/09 (8:30 am)
Apr 15: Export Prices ex-ag. For Mar (8:30 am), Import Prices ex-oil for Mar (8:30 am), NY Empire State Index for Apr (8:30 am), Capacity Utilization for Mar (9:15 am), Industrial Production for Mar (9:15 am), Mich. Sentiment –Prel for Apr (9:45 am)
Apr 18: -
Apr 19: Building permits for Mar (8:30 am), Core PPI for Mar (8:30 am), Housing Starts for Mar (8:30 am), PPI for Mar (8:30 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
Apr 13: AMD (A), AAPL (?), ASML (02:00 am ET), BBT (B), CBH (B), HDI (B), IFIN (A), LRCX (?), MOGN (?)
Apr 14: CREE (?), DJ (B), ETN (?), EMMS (?), FCS (B), FITB (B), FDC (B), GTK (B), HIB (B), MTG (B), PEP (?), RMBS (?), LUV (B), SUNW (A), NYT (B), UNH (B), VIP (?)
Apr 15: C (B), GE (?), KEY (B), MAT (B), RF (B), TRB (B), WB (B)
Apr 18: MMM (B), BAC (B), CHKP (B), CKR (A), CCK (A), LLY (B), HAS (B), IBM (?), JCOM (A), LNCR (A), MDC (A), NSC (?), NVLS (A), PH (B), PHG (01:00 am ET), STI (B), TXN (4:30 pm ET), UDR (A), WERN (A)
Apr 19: ADTN (B), ASD (B), ASO (B), ARMHY (?), BOL (B), BSX (B), CDWC (?), CHB (A), CHFR (A), CNB (B), CYMI (?), DHI (B), DOV (A), EMC (B), FRX (?), FCX (B), GM (08:00 am ET), GILD (A), ITW (08:00 am ET), RX (A), N (A), INTC (?), JNJ (B), JCI (B), JNPR (A), KFT (A), LH (B), LU (?), MEL (?), MGG (B), NCC (?), NTRS (B), PTV (A), RSH (?), SAFC (?), STX (A), SGTL (A), SGI (?), SOV (A), STT (B), SYK (A), SVU (B), SY (B), TASR (B), TER (A), CAKE (A), KO (B), USB (B), WFC (A), YHOO (?)

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.