Good morning! The market attempted to stabilize heading into Tuesday morning following the last two weeks of selling. The day began with a modest upside gap, but ran into resistance early on from prior highs at the end of last week in the S&P 500 and the closure of Monday's gap in the Nasdaq Composite. The intraday action in the indices was very choppy and the volume in the market was noticeably less than recent mornings. It continued to drop off as the day progressed and the range of the first hour of the day began to narrow. 

The selling within the range heading into the early afternoon was a lot more gradual overall than the upside. When the 13:00 ET reversal period hit at the 15 minute 20 simple moving average support, the market saw a brief upside reaction. The move maintained an average pace and was unable to penetrate morning price resistance, making it easier for the indices to pull back again into 14:00 ET. This time the 15 minute 20 sma broke and when the market hit the lows of the intraday range they reacted only briefly to the support before breaking to new intraday lows.

This late day breakdown in the indices first found support with the 15:00 ET reversal period as the Nasdaq closed its morning gap and the S&P 500 hit its 5 minute 200 sma support. Nevertheless, the volume was not strong enough to create an exhaustion move on the 15 minute charts. The indices pulled higher until hitting the 5 minute 20 sma resistance and then the bottom dropped out, creating another one of the rapid flushes I warned about in yesterday's column that has been increasing the risk for the bulls lately.

The market closed within a few ticks of the low of the day as all three indices again posted a lower close. The Dow lost 26.98 points (-0.2%) on the day, while the S&P 500 fell 5.49 points (-0.4%). The Nasdaq Composite saw the largest percentage decline, closing lower by 14.10 points (0.6%). A few sectors still managed to have a decent day. Gold stocks in particular did very well, ending the day with a 2.9% gain. Energy and oil services also posted gains, although most of this was due to a large morning gap.

Not much has changed as fast as my market bias since yesterday. The market is showing a lot more overlap from day to day as it has corrected in this support zone, but we are not seeing much for buy patterns develop yet. Again, even when we do on the intraday time frames, unless the market really rounds off at the daily lows, then we are more likely to see a choppier continuation of the correction anyway.

Economic Reports and Events
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 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.