Good morning! The market continued Monday's late day correction heading into Tuesday, but, as expected, it's been more of a gradual correction through time as opposed to through price. The day did see some stronger and smoother intraday trading like we were looking for, however, creating some decent daytrading opportunities even though there is not much out there on the daily front.

The volume on Tuesday was strong, coming in at about 1.69 billion on the NYSE and 2.07 billion on the Nasdaq. The Nasdaq Composite showed the most relative weakness on the day, closing lower by 9.39 points at 2,229.13. Advancers beat out decliners by a narrow margin of 1,553 to 1,500. The S&P 500 lost 2.42 points on the day to end at 1,292.08, while the Dow Jones Industrial Average closed lower by 8.88 points at 11,419.89. On the NYSE about 17 stocks rose for every 16 that fell.

Drug companies performed the best on Tuesday, putting in a 1.1% gain. The retailers had the toughest time, in part due to disappointing results from Home Depot (HD) and Staples, Inc. (SPLS). Home Depot fell 5.1% after failing to hit analysts' expectations, despite a 19% increase in Q1 profits. Staples lost 6.1%. One notable exception among the retailers was Wal-Mart (WMT), which rose 1.4% after beating analysts' estimates for its quarterly results.

There is a good deal of economic data coming out this week. Tuesday's U.S. producer price report showed that prices rose 0.9% in April, primarily due to increased energy prices. This was somewhat higher than the anticipated 0.8% increase. The core producer price index for finished goods rose 0.1%, however, less than the expected 0.2% increase, decreasing inflation concerns. Indicating a slowdown in the housing market, April housing starts dropped 7.4% in April. This marks their lowest levels since November 2004. On Wednesday the Labor Department will be posting its consumer price index, which is anticipated to move up 0.5% in April as compared to the 0.4% increase in March.

Tuesday's intraday action in the market began with some slight upside at the open, continuing the momentum from the prior afternoon, but it didn't last long. Price resistance from prior highs and congestion on the 15 minute charts and the S&P 500's 5 minute 200 simple moving average reined in the bulls and selling gradually took over. An initial decline into the S&P 500 and Dow's 5 minute 20 sma at the 10:15 ET reversal period was followed by nearly an hour of trading range activity along the support before it finally gave way coming out of the 11:00 ET reversal period. The pace increased steadily until exhaustion hit as the Nasdaq fell into Monday's lows and the S&P 500 hit its 100 day sma for the second day in a row.

The morning decline in the indices set the range that the market would end up holding for the remainder of the day. After pivoting over noon, the pace began to increase on the upside out of the 13:00 ET reversal period, taking the S&P 500 and Dow back into morning highs and the Nasdaq into its 5 minute 200 sma resistance. These sharp back and forth moves on the 15 minute time frame helped sustain a range into the close, although the second decline intraday out of 13:30 ET was much more gradual than the first and occurred on light volume. This is typical for a range, however, after the first several moves back and forth.

The market is still looking weak going into Wednesday. Within Tuesday's range the volume remained light on the upside move going into the afternoon, showing that the bulls are wary of returning too quickly to the fray. As a result, upside action in the market is still likely to remain more on the gradual side on the larger time frames, particularly the daily charts, over the remainder of the week. There is not a strong intraday bias regarding a break from Tuesday's range, because even though the move into the close was more gradual than the morning descent, it was not less than average and it retraced more than 50% back to the morning lows. This leaves it more open to movement in either direction on the shorter 5-30 minute intraday time frames.

Economic Reports and Events
May 17: Core CPI and CPI for April (8:30 am), Crude Inventories 5/12 (10:30 am)
May 18: Initial Claims 5/13 (8:30 am), Leading Indicators for April (10:00 am), Philadelphia Fed for May (12:00 pm)
May 19: -
May 22: -
May 23: -
May 24: Durable Orders for April (8:30 am), New Home Sales for April (10:00 am), Crude Inventories 5/19 (10:30 am)
May 25: Chain Deflator-Prel. for Q1 (8:30 am), GDP-Prel. for Q1 (8:30 am), Initial Claims 5/20 (8:30 am), Existing Home Sales for April (10:00 am), Help-Wanted Index for April (10:00 am)
May 26: Personal Income and Personal Spending for April (8:30 am), Michigan Sentiment-Rev. for May (9:50 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
May 17: ACXM (?), BEAS (?), FL (?). GYMB (?), HOTT (?), INTU (A), MW (A), PETM (A), ROST (B), CRM (?), SNDA (A), SNPS (A), V (?), ZLC (B)
May 18: AAP (B), ARO (A), ALKS (?), ADSK (A), BKS (B), BRCD (B), CTRN (A), CPWM (A), CLE (B), DELL (A), FMCN (A), GPS (?), LTD (?), MRVL (A), NWY (B), JWN (?), SHLD (B), STP (B), PLCE (?)
May 19: ASEI (B), ANN (B)
May 22: CPB (?), FLO (?), LOW (?), TECD (?), PAY (?), WTSLA (A)
May 23: CSC (A), LNUX (A), MDT (A), PVH (A), TOL (?), ZL (A)
May 24: AZO (B), CWTR (A), DLTR (B), JLG (A), MIK (?), NTAP (A), PSS (B), SPI (?), TIVO (A), WSM (B)
May 25: BLI (?), CHS (A), CMOS (?), JOYG (B), PDCO (B), PDC (B), PLMD (B), SAFM (B)
May 26: CBRL (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.