Good day! The Dow Jones Ind. Ave. ($DJI) fell 14.09 points on Tuesday, while the S&P 500 ($SPX) lost 2.87 points and the Nasdaq Composite ($COMPX) closed lower by 13.38 points. Most of the loss on the day came after 11:00 ET, following a sales warning from Yahoo that sent the stock plummeting and took the rest of the market with it. A resumption of the selloff in oil helped the market recover into the close, but it was a difficult day of trading.

The session began on Tuesday with a very slight upside gap when premarket selling reversed out of the 8:30 ET economic data. The reports were two-fold. On the one hand, producer prices for August rose only slightly, at 0.1%. This was smaller than the increase of 0.3% that had been anticipated. The core producer prices were of particular interest because they actually fell by 0.4%, as opposed to rising 0.2% as predicted. These numbers lowered inflation concerns and reinforce the belief that the Fed will leave the overnight lending rate unchanged at 5.25% on Wednesday. On the other hand, the housing sector has continued to weaken. Construction of new homes fell 6% last month, when a decrease of 2.5% had been anticipated. Building permits also fell further than expected, with a 2.3% decline in August.

The market didn't have an easy time holding onto these early morning gains. The indices had begun to round off at the premarket highs just prior to the open and the selling increased sharply out of the gate. The first wave of downside only lasted about 10 minutes, but it completely filled the gap and then some. Afterwards the indices based along the intraday lows with the Nasdaq hugging its 5 minute 20 simple moving average support. This formed a continuation short pattern out of the 10:15 ET reversal period and took the market to new intraday lows.

The selling stalled a second time when the Nasdaq ran into support from the lows of the prior afternoon. A slight volume spike on the 1 minute charts helped indicate the exhaustion on the smaller time frames intraday. The correction off that support got off to a slow start, but picked up with the 10:45 ET reversal period and took the indices back into the zone of the previous base and the Nasdaq and S&P 500's 5 minute 200 sma resistance.

The increase in the upside pace at this point suggested that the market might base along that resistance and eventually be able to move higher again, although the larger time frames still suggested a continuation of the correction off last week's highs. The debate was quickly decided when the news hit from Yahoo which warned that a slowdown in ad revenue would reflect poorly in its third quarter sales results. The selling that followed was felt across all three of the major indices and led to them hitting their 15 minute 200 sma support intraday within an hour of steady, but choppy, selling.

The choppier type of trading, with more overlap from bar to bar, remained the theme throughout the rest of the day. Some rounding off at lows allowed the indices to change pace into the 14:00 ET reversal period and the market climbed steadily into the close. It lacked the clear-cut patterns, however, that many intraday traders look for and the overlap muddied the waters as well. Ambivalence ahead of Wednesday's Fed was likely a factor in this type of market activity.

All eyes will be on the Fed today. A typical Fed day begins with some upside in the morning before things slow down ahead of the announcement. Risk increases dramatically into the early afternoon as volume drops off with intraday traders taking to the sidelines. The reaction then tends to illicit several reactive moves. These usually come in two segments of three waves each. The first is on the 1-2 minute charts with a reaction, counter-reaction, and then continuation of the initial move. This same three-wave action will generally repeat on the 5 minute charts. The counter-move can be greater than the initial reaction. The risk to intraday traders is the greatest in the first 15 minutes following the announcement since volatility and volume increase dramatically. Some folks have difficulty with their quotes keeping up and getting fills in a rapidly moving market, such use a lot more caution at that time.

Economic Reports and Events
Sept. 20: Crude Inventories 9/15 (10:20 am), FOMC policy statement (2:15 pm)
Sept. 21: Leading Indicators for Aug. (10:00 am), Philadelphia Fed for Sep. (12:00 pm)
Sept. 22: -
Sept. 25: Existing Home Sales for Aug. (10:00 am)
Sept. 26: Consumer Confidence for Sep. (10:00 am)
Sept. 27: Durable Orders for Aug. (8:30 am), New Home Sales for Aug. (10:00 am), Crude Inventories 9/22 (10:30 am)
Sept. 28: Chain Deflator-Final. Q2 and GDP-Final. Q2 (8:30 am), Initial Claims 9/23 (8:30 am), Aug. Help-Wanted Index (10:00 am)
Sept. 29: Personal Income and Personal Spending for Aug. (8:30 am), Sept. Michigan Sentiment-Rev. (9:50 am), Sept. Chicago PMI (10:00 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.
Sept. 20: BBBY, BMET, KMX, CTAS, CC, CMTL, DRI, MS, XRTX
Sept. 21: COMS, COGN, CAG, FDX, GIS, NKE, PALM, RAD, SCHL
Sept. 22: -
Sept. 25: JLG, WAG
Sept. 26: DBRN, FUL, JBL, LEN, PAYX, RHAT, WOR
Sept. 27: MKC
Sept. 28: ACN, FDO, RIMM, TXI, TIBX
Sept. 29: GPN
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.