Good morning! Thursday got off to quite a slow start. The more choppy action of recent weeks held and led to a trading range throughout the morning and into the early afternoon. The NASDAQ had the most relative strength, making higher highs early on. While the SP500 held the prior afternoon pivot low just after 15:00 ET, the NASDAQ didn't even break the 5 minute 20 sma support. Both levels hit at the same time, creating a pivot around 10:00 ET that led to another new high in the NASDAQ and a retest of highs in the SP500.

The stronger rally led to a slower move off the resistance initially, picking up speed back into prior lows where support hit once again to establish the morning range. This continued with slower swings into about 13:15 ET. The last 5 minute upswing took place with exceptionally light volume and a much more gradual pace overall than the moves within the range up to that point. Since the final move was unable to really break back into the upper part of the range, all of these factors combined to make this triangle a bearish one, more likely to break lower than the other way around.

The breakdown from the triangle first hit support after putting in an equal move as compared to the prior 5 minute drop just before 14:00 ET. I started looking for a 5 minute Bear Flag at that point, but it broke even more quickly on just a 2 minute Bear Flag, leading to another wave of selling. Once again, support hit as the market put in an equal move to the prior 5 minute drop. This time we started to see volume pick up, something that was lacking on the prior drop and hence indicating that the selling was not quite over.

Due to the pace of the downside move, it took a bit more time and another small downside move for the market to start to correct to the selling. The best pattern for the correction was the 2B reversal pattern on the 5 minute NASDAQ where the index put in a very slightly lower low as all three indices hit strong support on the 15 minute charts. This created a pivot in that index that took it back to the 5 minute 20 sma into the close for a quick scalp to end the day.

I don't have a strong bias for the indices going into today. A bit more of a correction to yesterday's drop is likely for the morning, but overall the indices look like they want to keep swinging back and forth on the 60 minute charts. They haven't yet begun to really favor one end of this range over the other yet, even though the SP500 and Dow have had a slightly more bearish bias while the NASDAQ has been a bit more bullish.

PENN, long from the 25th or 2nd in the $31.50-31.80 zone (depending on what trigger you used), hit trailing stops under $32.50 after highs of $33.94. AAP from the $51.88 zone on the 25th is correcting a bit on the daily after two strong weeks. Highs of $55.44. Trailing stop hit for swingtrades. 50 day sma is support for position trade. 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 in ADTN and the 20 day sma in VAR. Tighter trailing stops could also be used.

Economic Reports and Events
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 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.