Good day! Volume was light on Thursday following the early morning announcement of a terrorist plot that targeted flights to the United States from Great Britain. Trading out of the open was the most shaky, but while the session remained choppy as a whole, this was not that unusual given the prior day's extreme selloff. Such strong trend moves will generally correct with a more gradual counter-move. These tend to have a lot more overlap in price as a result. As mentioned in yesterday's column, the market was also oversold by the end of Wednesday's session. Strong daily support assisted in a reversal off morning lows that lasted throughout the day on Thursday. By the end of the day the Dow Jones Ind. Average had gained 48.19 points, the S&P 500 had tacked on 5.86 points and the Nasdaq Composite had risen 11.46 points.

The Nasdaq again outpaced the Dow, moving steadily higher in a narrowing trading channel into the early afternoon. Upon hitting its 5 minute 200 simple moving average resistance the Nasdaq broke the lower end of its trend channel, but only for about 30 minutes before it again moved higher, breaking through the 200 sma into the 14:00 ET reversal period. From there it made its way back to the highs of the morning channel.

The S&P 500 and Dow Jones Ind. Ave., on the other hand, fell into a trading range over noon along 15 minute 20 sma resistance. The range narrowed with a triangle formation into the early afternoon. The pivot off the 13:00 ET reversal period held and led to a break in the trading range around 13:30 ET. These two indices also rallied to new intraday highs with volume picking up slightly on the breakout to confirm the move.

The Nasdaq and Dow held the highs on this move for the remainder of the session. The 14:00 ET reversal zone came as the market was running into resistance on the larger time frames. In the Nasdaq it was prior intraday highs and lows of the last several days as well as the 15 minute 200 sma. Similar price resistance levels also hit in the Dow and S&Ps. The S&Ps had the most gradual pullback from this high. They were able to make a very slightly higher high into their 5 minute 200 sma just before the end of the day coming out of the 15:00 ET reversal period.

I don't have a strong bias for the market right now, but am still more hesitant on longs than I am on shorts as swingtrades even though I have approximately an even number of both open at this time. There is still a lot of congestion on the larger intraday time frames. Shorts are going to have a constant battle on their hands for a few days in order to break through the daily support of the last month or so. As long as the upside pace remains weaker like it did on Thursday, however, the Nasdaq can accomplish this fairly easily. An initial attempt to break, followed by a pullback up into the congestion and then a more solid break is the most likely scenario given that the support in the Dow and S&Ps at prior lows probably would not hit until the Nasdaq had broken its own prior low on the daily chart.

Economic Reports and Events
Aug. 11: Export Prices ex-ag, Import Prices ex-oil, Retail Sales, Retail Sales ex-auto for July (8:30 am), Business Inventories for June (10:00 am)
Aug. 14: -
Aug. 15: Core PPI and PPI for July (8:30 am), NY Empire State Index for Aug. (8:30 am), Net Foreign Purchases for June (9:00 am)
Aug. 16: Building Permits, Core CPI, CPI and Housing Starts for July (8:30 am), Capacity Utilization and Industrial Production for July (9:15 am), Crude Inventories 8/11 (10:30 am)
Aug. 17: Initial Claims 8/12 (8:30 am), Leading Indicators for July (10:00 am), Philadelphia Fed for Aug. (12:00 pm)
Aug. 18: Michigan Sentiment - Prel. for Aug. (9:50 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.
Aug. 11: CCUR, ERJ, IAG, PBR
Aug. 14: A, ABV, BGO, CA, HEW, MED, NWRE, NTES, NVAX, SSRI, RNAI, SYY, VAL, WRNC
Aug. 15: ANF, AEOS, AMAT, BRL, BJ, DE, DKS, FOSL, HAR, HD, PETM, SKS, SNDA, SPLS, STP, TJX, UBS, WMT
Aug. 16: ARXX, BEAS, BLI, CAI, CHRS, DAKT, HPQ, HOTT, NTAP, ROST, CRM, SNPS, TLB, EL, TWB, ZUMZ
Aug. 17: ARO, ADSK, BKS, BEBE, BRCD, CHL, CLE, CPWM, DELL, GME, GPS, HIBB, LTD, MRVL, NWY, JWN, SHLD, PLCE
Aug. 18: ANN, FL
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.