Good day! The market put in a pretty nice range on Wednesday after two days of chop. The very gradual uptrend continued into the open with the market gapping higher to start off the day. The gap was still into upper trend channel resistance, however, and was small enough that it filled rather quickly. Despite its more relative weakness in recent months, the NASDAQ held up the best and held the 15 minute 20 sma support on the drop, while the SP500 and Dow Jones Ind. Ave. both broke the trend channel support and instead had to settle for price support from the prior afternoon.

For those unfamiliar with the term, "trend channel resistance" is the resistance line that hits when you connect prior highs and extend it out. When it comes back into that line the market will often hold it and correct. These are shown in dark red on the 15 minute YM (mini-sized Dow) and NQ (EMini NASDAQ) charts. Trend channel support comes from connecting lows.

The market bounced back and forth between support and resistance until lunch rolled around. At that point the market had fallen back into support levels around the 5 minute 20 sma. Instead of bouncing strongly off it, however, the indices hugged the support zone. With volume dropping off as well it helped to indicate a breakdown into the afternoon would be most likely. Unfortunately, I happened to be out actually getting lunch and completely missed the opportunity. The pace and the volume were the two strongest clues as to directional bias though, and when you see this again in the future, which you will, keep that in mind.

As the afternoon rolled on, we didn't really see much for new pattern setups intraday that fit into the category of lower risk. The market formed a small bear flag into 13:30 ET, but the rest at support was not long enough to allow it to build up much selling pressure, so it had to rest again very quickly after setting up. The rest of the day was basically the same. The market would base slightly, usually into the 5 minute 20 sma, and then break lower, but without really moving too far off the moving average. Typically a flag takes almost twice as long to form as it did to drop into the base to start with. This was not the case Wednesday when the market held closer to a 1:1 time ratio between the prior trend move and the correction

The main support following such a drop was the prior lows on the 60 minute charts. The zones are holding, but the exact prices have broken. This leaves the door open for rounded lows on the daily charts where we get more selling, but each low breaks by a lesser amount than the one which preceded it. This is common heading into a correction coming off support zone and can mean stronger upside bounces when the rounding finally starts to turn over as the downside pace slows as new lows are made.

Economic Reports and Events
Apr 21: Initial Claims 04/16 (8:30 am), Leading Indicators for Mar (10:00 am), Philadelphia Fed for Apr (12:00 pm)
Apr 22: -
Apr 25: Existing Home Sales for mar (10:00 am)
Apr 26: Consumer Confidence for Apr (10:00 am), New Home Sales 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
Apr 21: ACS (?), AFFX (A), ACL (?), ATI (B), AT (B), ABC (B), AMGN (?), ARBA (A), T (?), ADP (B), BAX (B), BEBE (?), BLS (B), BRCM (A), CZR (B), ELY (A), ED (?), CMI (B), CY (B), DHR (B), DV (?), DCLK (A), ELNK (B), ECL (B), ELX (?), FHN (B), FISV (A), FDRY (A), FSL (A), GENZ (B), GVHR (?), GOOG (?), GDT (?), HAR (?), HLIT (A), HSY (A), HYSL (A), INFA (A), IR (?), IGT (B), ISRG (A), LEG (A), MAR (B), KRB (?), MCD (B), MEDI (B), MRK (?), NFLX (A), NE (?), NOK (?), NWAC (B), NVS (?), NUE (?), OI (?), ODP (B), OMX (?), PNC (?), DGX (B), RHI (A), ROH (B), RCL (B), SNDK (A), SAP (?), SGP (B), SFA (A), SHW (B), SWIR (A), SIMG (A), SSTI (A), SLM (B), SDS (A), SYNA (A), TPX (A), TSRA (A), TXT (B), TQNT (A), UCBH (A), UNP (?), UPS (B), VLO (?), VTSS (A), WDC (A), WY (?), WHR (06:00 am ET), XRX (B), XLNX (A), YELL (A), ZION (A)
Apr 22: CX (B), EK (B), FO (B), HAL (B), IP (B), LSCC (?), LEA (B), HCR (B), MYG (B), MWV (B), RDC (B), ERICY (?), USFC (B), WFT (B)
Apr 25: ALTR (4:15 pm ET), ABNK (A), AMX (A), ACF (A), ACI (B), ASH (B), ATHR (?), AUDC (A), AVNX (A), BEAV (B), BYD (A), CD (A), CNET (A), CAM (B), XRAY (A), DST (A), ETR (B), EXC (A), GLK (A), HMY (05:30 am ET), HBAN (B), KMB (B), MSPD (A), PCL (A), PVN (?), SBC  (B), SEPR (?), SLAB (A), SII (?), STK (A), SWFT (A), BNK (B), TRI (A), ZMH (A)
Apr 26: ABGX (A), ACE (A), AAI (B), AKS (B), AW (?), AXP (?), AGP (A), ABI (B), ASN (B), ATML (A), AUO (B), BJS (B), BOW (B), BP (02:00 am ET), EAT (B), BC (B), CHRW (?), COH (B), CVG (?), GLW (A), CFC (B), CK (B), ESV (B), EQR (B), ESRX (A), FNF (B), FPL (B), TV (A), HRS (A), HMA (?), INSP (A), LLL (B), LVLT (?), LXK (B), LMT (?), MSO (B), MHS (B), MNST (B), NVTL (A), OXY (?), PENN (B), PNR (B), PDG (?), PPP (?), RFMD (A), ROK (B), SLE (B), SLB (B), SNWL (?), SO (B), SNV (?), TMX (A), MHP (B), TSM (?), UST (?), VRTX (A), VFC (?), VIGN (B), WAT (B), WBSN (A), WWY (?), XL (A)

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.