Good morning! After turning over into the weekend, the market continued to head lower this week. After a slow start on Monday, the market gapped up slightly on Tuesday, right into resistance from the prior day. Selling came in almost instantly. It stalled a bit into the 10:15 ET reversal period, but continued quickly to new lows, breaking Monday's support. As on Friday, a third wave of selling on the 2 minute charts followed. The Nasdaq 100 EMini fell into its 20 day sma support, while the Dow Jones came into its 50 day sma support at the same time as the 10:45 ET reversal period hit. The strong volume to indicate short-term exhaustion on the 5 minute charts combined with these other factors to push the indices into corrective mode over noon.

Volume dropped off significantly over noon as the indices were pushed into a narrowing trading range. As the range approached the 15 minute 20 sma resistance, the pace within it turned over, favoring slower upside and stronger downside. The selling attempted to resume out of 13:30 ET, but it took the drop out of the 15:00 ET reversal period for the market to really break the morning lows.

As on Monday, this late day action was a lot more hesitant than in the morning. Part of it was because the market had initially pulled lower a little earlier than is ideal. This can make risks for traps in the direction of the trend higher and often tends to add concern for slower downside even when the patterns work out later on. Another issue was that as the market began to range on the 2 minute charts from 13:45-15:00, there were several rapid upside spikes with slower downside action within the range. This can also make it easier for support levels to break by a lesser extent and can help the market bounce back more quickly once it does reverse. This can be seen with the reaction into the last half hour of the day on Tuesday which took the indices all the way back to the middle of the mid-day range by the close.

A lot of stocks still have room to move lower as the week progresses. Intraday, however, we are a bit oversold and are at decent support levels to allow for the closing correction to continue into the morning on Wednesday. I'll be treating the majority of buy setups as daytrades at this time due to the rapid pace of the downside action recently. I am still looking for more rounding off at lows, with lows breaking by lesser degrees as compared to the prior ones before I expect to see follow through on the upside that can last more than half a day.

Economic Reports and Events
Apr 12: Trade Balance for Feb. (8:30 am), Crude Inventories 04/07 (10:30 am), Treasury Budget for Mar (14:00 pm)
Apr 13: Business Inventories for Feb. (8:30 am), Export prices ex-ag for Mar (8:30 am), Import Prices ex-oil for Mar (8:30 am), Initial Claims 04/08, Retail Sales for Mar (8:30 am), Retail Sales ex-auto for Mar (8:30 am), Mich. Sentiment-Prel. for Apr (9:50 am)
Apr 14: Capacity Utilization for Mar (9:15 am), Industrial Production for Mar (9:15 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 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
Apr 12: CBH (B), GCI (B), GTK (B), HDI (B), LRCX (A), SOSA (A)
Apr 13: MTG (B), NYT (?), TRB (B), VCP (?)
Apr 14: -
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.