Good morning! Wednesday experienced another mixed session. There were some more consistent intraday trend moves, however, than we have seen lately. The morning began with a slight downside gap as the indices continued the selling that began the prior afternoon. Support from 15 minute lows on Monday held in both the S&P 500 and the Dow Jones Industrial Average and the market put in a decent climb over the next hour. The pace slowed somewhat into the 15 minute 20 simple moving average and 5 minute 200 sma resistance, creating a very slightly higher high going into the 10:45 ET reversal period and leading to a reversal mid-morning.

The pace on the selling off highs was about average, making it difficult for the morning lows to break without another correction off support. This took place at 11:30 ET and going into the 12:00 ET reversal period as the market bounced into the 5 minute 20 sma resistance. Volume was light, showing a lack of downside exhaustion. Even though the market slowed at the morning lows at the 13:00 ET reversal period, they were still able to break them over the course of the next half hour. This time the volume increased to rival its highest levels of the day and create a more solid exhaustion and support level intraday.

The market bounced quickly out of 13:30 ET, running back into the 15 minute 20 sma once again. I was looking at two options at that time. Either the market would hold the upper half of the rally and form a Phoenix buy setup, or a triangle trading range would occur before it could try to break higher if the market retraced more than 50% of the rally. Well, it went for more of a middle ground, retracing only about 50%. As a result, it broke higher on a sharper version of a Phoenix and did not break the prior highs as much as a typical pattern would have by basing along the resistance and then breaking higher. It hit an equal move on the 5 minute charts as compared to the initial rally off lows around 14:45 ET and again began to pull back. The pace was a bit more gradual than the last retracement, forming a bull flag into the 5 minute 20 sma to lead to a third and final rally on the 5 minute charts ahead of the close.

The market managed to close slightly higher on Wednesday, gaining 18.97 points on the Dow (+0.2%), 1.99 points on the S&P 500 (+0.2%) and 10.41 points on the Nasdaq Composite (+0.5%). This continues the action we saw towards the end of last week where the selling pace on the daily charts has been slowing, there are more upside moves on the 15 minute charts, but the market has still been susceptible to strong downside swings on those time frames. This is normal corrective action following a steep decline like the market experienced coming off this month's highs.

On the daily charts, I am seeing a lot of support scanning through individual stocks, so we have a decent shot of experiencing more upside on Thursday. The risk is still there, however, for downside flushes since this market is rather nervous at present. Nevertheless, most of the daily short patterns I have located though are things I would like to see correct a couple of weeks before forming patterns for more downside.

Economic Reports and Events
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)
May 30: Consumer Confidence for May (10:00 am), Chicago PMI for May (10:00 am), Crude Inventories 5/26 (10:30 am), FOMC Minutes for May 10 (2:00 pm)
June 1: Auto Sales for May (12:00 am), Truck Sales for May (12:00 am), Initial Claims 5/27 (8:30 am), Productivity-Rev for Q1 (8:30 am), Construction Spending for April (10:00 am), ISM Index for May (10:00 am)
June 2: Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate for May (8:30 am), Factory Orders for April (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 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 25: BLI (?), CHS (A), CMOS (?), JOYG (B), PDCO (B), PDC (B), PLMD (B), SAFM (B)
May 26: CBRL (B)
May 29: -
May 30: ABS (?), CA (A), VOD (2:00 AM ET)
May 31: ADCT (A), COST (B), DBRN (A), HOV (A), NOVL (A), SIGM (?), TIF (B)
June 1: CIEN (?), DG (B), HNZ (B), PLL (A), PMTK (?), NX (?), WIND (A)
June 2: -
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.