Good day!  The market had quite a ride on Wednesday. It started out with a gap higher right into resistance on the 15 minute charts at the 20 sma intraday. This continued the correction to the prior afternoon's selloff, but it was enough of one to stall early on, leading into another strong wave of selling on the 15 minute charts that lasted throughout the morning. First it dropped into the prior day's lows in the NASDAQ, finding a bit of support there for a slight correction on the 5 minute charts. Then it continued and put in an equal move on the 15 minute charts as compared to the prior afternoon, hitting that price support just after 100:00 ET as the market headed into the mid-day doldrums.

I was looking at two possibilities heading into noon. The first was a longer trading range on the 15 minute charts followed by another selloff on that time frame. The second was a slightly lower low into noon, creating a 2B reversal that would lead to a rally into the afternoon. Since we'd already had three waves of selling on the 15 minute charts, I was leaning towards the second possibility. The market moved steadily into the 5 minute 20 sma, holding that level into 12:00 ET and creating a Bear Flag in the NASDAQ. This held the pattern for another move lower for a reversal into the afternoon.

Now this is where news threw the market for a bit of a loop. Capitol Hill was evacuated due to a plane flying into the restricted airspace, creating a bit of a panic initially in the market. This meant a much lower low than you typically see for a 2B reversal pattern. Since the market recovered right away, however, it made it likely that the scare was not serious or at least no longer valid. So, the drop essentially created the same sort of flush-out in the market that a 2B would have and it opened the way for a move higher into the afternoon.

The upside began gradually, basing on the 5 minute charts after pulling back to the pre-news breakdown zone. This broke higher into the 13:00 ET reversal period, taking the market back to price resistance from prior 5 minute highs in the SP500 and Dow Jones Ind. Ave. This resistance held very well and the market began to correct into the 5 minute 20 sma. I was not looking for further downside into the afternoon, but rather for a Cup with Handle on the 15 minute charts. On the 5 minute charts I figured this would take the form of a triangle since the initial pull off highs was a bit on the stronger side in the SP500. Instead the 5 minute 20 sma support held perfectly and the market pace picked up a great deal to quickly break prior highs and make new intraday highs coming out of the 14:00 ET reversal period. This rally took the market all the way back to prior 30 minute highs, which were strong enough to stall the market and lead it into a range for the remainder of the day.

On the daily charts it is looking like we are starting to create the handle on a Cup with Handle pattern that started with the drop during the second week of April. This is likely to mean another week or two of range bound trading. Pivots off 15 minute support and resistance levels within the range should provide some nice setups intraday, although swingtrades will likely be more difficult to come by.

PENN, long from the 25th or 2nd (depending on what trigger you used), has a target of $35. It made new highs on Tuesday at $33.94. Trailing stops on remaining shares no lower than a break in $32.50. AAP is correcting a bit on the daily after two strong weeks and ASKJ remains of interest. Some stocks to keep an eye on this week are BBI, VAR, ALGN and ADTN long and UNP and CCU short. ALGN, UNP and CCU triggered earlier this week. ALGN target is $10 while UNP has support at $62 and CCU has hit it's target of $30 and then some (lows of $29.67). VAR and ADTN both triggered on Wednesday. Both put in substantial moves and new support is the low from yesterday. Tighter trailing stops could also be used.

Economic Reports and Events
May 12: Initial Claims 05/07 (8:30 am), Retail Sales for Apr (8:30 am), Retail Sales ex-auto for Apr (8:30 am)
May 13: Business Inventories for Mar (8:30 am), Export prices ex-ag. For Apr (8:30 am), Import Prices ex-oil for Apr (8:30 am), Mich Sentiment-Prel. For May (9:45 am)
May 16: NY Empire State Index for May (8:30 am)
May 17: Building Permits for Apr (8:30 am), Core PPI for Apr (8:30 am), Housing Starts for Apr (8:30 am), PPI for Apr (8:30 am), Capacity Utilization for Apr (9:15 am), Industrial Production for Apr (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 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
May 12: ALTI (?), AEOS (B), ADI (A), DELL (A), DT (02:00 am ET), BIZ (?), EMRG (?), HSP (?), KSS (A), LTXX (A), MOVI (B), NVDA (A), PSUN (?), TGT (B), TLWT (?), URBN (B), WMT (?)
May 13: DPH (06:30 am ET), PBR (?), TIF (B)
May 16: A (A), BGO (A), CNR (?), GG (B), LTD (?), LOW (B), SNDA (A)
May 17: ANF (A), AMAT (4:30 pm ET), BKS (B), BJ (B), BGP (A), DE (B), HPQ (?), HD (B), JCP (?), JWN (A), PNRA (A), SKS (B), SPLS (B)

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.