Good day! It was a tough session for the market on Wednesday as a rough start to earnings season combined with increasing tension in the Middle East. The result was a sharp downtrend as the market corrected more severely from the resistance at Tuesday's highs than indicated heading into that day's close. The Dow Jones Ind. Ave. ($INDU) closed lower by 121.59 points (1.1%). The S&P 500 ($SPX) lost 13.92 points (1.1%). The Nasdaq Comp. ($COMPX) was the hardest hit though, primarily thanks to the falling tech sector. It lost 38.62 points (1.8%) on the day.

After the kidnapping of two more Israeli soldiers, Israel launched an assault in southern Lebanon, calling the abductions an "act of war." This comes on the heels of the terrorist attack in India and an ongoing battle with Iran over its nuclear enrichment program. Oil, energy and precious metals have risen gleefully on this turmoil, although the remainder of the market is feeling the pressure. August crude ended up 79 cents at $74.95/barrel, while delivery for August gold rose $8.10 to $651.20/ounce.

The initial action out of the gate was typical of a session with strong overhead resistance on the intraday charts. In this case it was prior highs and the 15 minute 200 sma on several of the indices. The market corrected to this into the open, gapping lower in the case of the Nasdaq, and began to base. Soon, however, the selling continued, putting in three waves of downside on the 5 minute Nasdaq by the time the 10:45-11:00 reversal zones hit.

Significant support hit on the 15 minute charts hit at this time from the prior session and I started looking for a bit larger mid-day reaction to support than seen at prior 5 minute lows. While it lasted slighter over an hour, the upside pace on the corrective move remained weak and volume declined as the indices hit their heads on the 15 minute 20 sma resistance.

The 12:00 ET reversal period led to a break in this mid-day trading channel and a second set of selling. It took until 14:00 before the indices managed another three waves of downside on the 5 minute charts. Once more, the market tried to create a larger correction off the lows. This time around the action was a bit more choppy. A somewhat longer base led to a fourth move, which is not uncommon, into 15:00 ET, bringing this second smaller intraday downtrend to a close. The result was a trading range for the last two hours of the day in the Nasdaq and rounding off at lows into the close in the S&P and Dow.

Plenty of room still remains on the larger daily charts for many stocks to see continued selling pressure over the next couple of weeks. Intraday we have gone from an overbought level into Tuesday's close on the 15 minute charts to an oversold one into Wednesday's close. We have not seen a significant volume spike, however, on the 15 minute charts. This would tend to indicate an exhaustion move when the selling pace is stronger than average, as was the case on Wednesday. Without that flush it will be more difficult for the market to bounce back strongly, particularly back over Wednesday's highs.

Economic Reports and Events
July 13: Initial Claims 7/8 (8:30 am), Treasury Budget for June (2:00 pm)
July 14: Business Inventories for May (8:30 am), Export Prices ex-ag for June (8:30 am), Import Prices ex-oil for June (8:30 am), Retail Sales for June (8:30 am), Michigan Sentiment - prel. for July (9:50 am), Business Inventories for May (10:00 am)
July 17: NY Empire State Index for July (8:30 am), Capacity Utilization for June (9:15 am), Industrial Production for June (9:15 am)
July 18: Core PPI and PPI for June (8:30 am), Net Foreign Purchases for May (9:00 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
July 13: CTAS (A), FLE (B), MAR (B), NXY (?), PEP (B), TXI (?), TRB (B), VCP (B)
July 14: FNFG (B), GE (?), RF (B)
July 17: C (B), CBH (B), CCK (A), ETN (B), TV (A), HDI (B), MAT (?), NBIX (A), NVS (B), PHG (?), GWW (B)
July 18: ADTN (?), AMTD (?), ASO (B), CHKP (A), CNW (A), CSX (A), DTAS (A), FDG (?), ILMN (A), IBM (?), KEY (B), MER (?), MTG (B), NBB (B), PKG (A), STT (B), KO (B), NYT (B), USB (B), UTX (B), WFC (B), YHOO (?)
July 19: ABT (?), ADS (?), DOX (?), ASD (?), APH (?), AMR (?), AAPL (A), ASML (?). AZR (A), BAC (?), BCR (A), CDWC (B), CIT (B), CBSS (?), CBST (A), ET (A), EBAY (?), EFII (A), FHN (A), FLIR (B), GD (B), GPC (B), HST (B), INTC (A), ISIL (A), JPM (B), JNPR (A), KEA (?), NITE (B), LRW (A), LRCX (?), MAN (B), MEL (B), MOGN (A), MGI (?), MOT (A), NTRS (?), NVLS (?), JNC (B), NVEC (?), PNC (?), PLCM (?), QCOM (A), RDN (A), RMBS (?), RYL (B), SSTI (?), LUV (B), STJ (B), STI (B), SWFT (?), SNV (?), TER (A), ALL (A), BK (B), TMK (A), UIS (B), UNH (B), WM (A), YUM (A)
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.