Good day! The market climbed higher into Thursday's session. In the premarket, the Commerce Dept. reported a 3.1% increase last month on durable-goods orders. This strongly beat expectations of a 2% increase. Additionally, May's orders were revised higher to a 0.3% gain as opposed to the previously reported loss of 0.2%. In other news, initial jobless claims for state unemployment benefits fell by 7,000 to 298,000 last week. This takes the four-week average to 312,750. Economists had expected jobless claims to rise.

As has been the case all week, however, the market simply couldn't hold onto these gains. The selling hit as soon as the first reversal period of the day rolled around at 9:45 ET. This brought the indices back into opening lows. They were unable to show a strong move off that level which hit with the 10:00 housing data. New home sales fell 3% in June and May's sales were also revised lower while inventory of unsold homes rose by 0.7%. Many home builders are also cutting their 2006 profit outlooks as a result of this decline.

The market reacted very little to this latest data, which many had already accepted as a given ahead of time. Instead the indices climbed gradually on declining volume, creating a short setup on the 5 minute charts heading into 10:30 ET. The breakdown took the indices into support from the prior afternoon and closed the S&P 500's gap zone. These hit at the 10:45 ET reversal period and the support held into lunch.

Over noon the market began to turn over. The upside pace continued to decline as compared to the selling, creating a strongly bearish bias heading into the early afternoon. Volume dried up as the indices began to favor the lower end of the trading range. As the 13:00 ET reversal period hit, so did the selling. The pace increased dramatically as the Dow closed its morning gap and the S&P 500 and Nasdaq fell into 5 minute 200 sma support. A series of three waves of selling took the Nasdaq into the prior day's lows and the 14:00 ET reversal period helped the market begin a longer correction on the 5 minute charts going into the last two hours of the day.

The remainder of the session continued with text-book trend action. The three waves of downside were followed by a bear flag on the next time frame up to take it into a fourth wave of selling. This set the mood for a 2B reversal on the Dow and S&Ps as the S&P 500 hit its prior day's lows with the 15:30 ET reversal period. Typically a phoenix will then follow the 2B. There wasn't enough time left in the regular session, but it followed through well in the afterhours trading.

My bias heading into the weekend is still more on the bearish side. I will be watching primarily for a 15-30 minute base for a breakdown. The lows of the range will continue to be support, however, so this is more of a daytrade bias at the moment than anything else. The ideal action for this to trigger would be more of a trading range in the morning, continuing the afternoon base near lows, which can then be followed by another strong decline. Without the smaller range near Thursday's lows though, it will be more likely that we just fall into a larger range on the 15 minute charts into the weekend.

Economic Reports and Events
July 28: Chain Deflator-Adv. for Q2 (8:30 am), Employment Cost Index for Q2 (8:30 am), GDP-Adv. for Q2 (8:30 am), Mich. Sentiment-Rev. for July (9:50 am)
July 31: Chicago PMI for July (10:00 am)
Aug. 1: Auto Sales and Truck Sales for July (12:00), Personal Income and Personal Spending for June (8:30 am), Construction Spending for June (10:00 am), ISM Index for July (10:00 am)
Aug. 2: Crude Inventories for 7/28 (10:30 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.
July 28: ALE, AXL, ANDE, ATW, BHI, BDX, BLC, CVX, CEG, CVH, FPL, GPN, IR, ITT, LEA, HCR, ODP, OS, OSTK, SCG, SRP, SSD, TE, WMI
July 31: AFFX, AG, ALO, ATRS, ARM, AVP, GPRO, GLG, HUM, ISSX, KCI, MET, MTU, NLS, PYX, PWAV, RGC, RNR, SPG, STO, PFG, THOR, TP, TSN, UDR, VMC, WFMI
Aug. 1: ADPT, MDRX, ANR, ACAS, AQNT, ITU, CKFR, COH, CDE, CSC, CEI, DPL, EK, ELN, ERTS, EDS, EMR, ENZN, EOG, EOP, EQR, EXPD, FE, FWR, GW, GPI, GTRC, HLT, IINT, IACI, IP, JCOM, MVSN, MRO, MAS, MIG, MWV, TAP, NLC, NRG, NSS, OSK, PKD, PH, PPC, PDE, PEG, KWK, Q, RRD, SIRI, SWN, SBL, TX, TSRA, MOS, SVM, JOE, TWTC, TXU, UPL, VLO, VCLK, VZ, VSH, VC, VNO, XEL
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.