Good day! The market took folks for quite a ride on Tuesday. The day began with a great deal of strength coming out of the rounded lows on the 30 minute charts and Monday afternoon's rally. The Dow Jones Ind. Ave. and SP500 both gapped slightly higher into the open and after only a slight pause the indices took off to the upside. This was great news for a lot of folks holding swingtrades on the long side because many stocks that had been just trying to break out of their ranges really took off Tuesday morning.

The rally was very strong, leading to new highs in the SP500. The prior highs in the Dow finally managed to slow the move into about 10:30 ET. By this point, the SP500 and Dow in particular were very extended intraday. This led to a correction going into the latter half of the morning. It began rather slowly, pulling into the 5 minute 20 sma support with declining volume. This meant a bull flag, but the over-extension kept it from really taking off. The Dow put in a slightly higher high, but the SP500 held its own while the weaker NASDAQ only managed to make it about halfway back to morning highs.

Without any volume coming in on the 12:00 upside attempt, the market was unable to hold onto its gains. The pace began to slowly turn over going into the early afternoon. The correction along support from about 12:15 to 13:15 ET was particularly telling. Instead of bouncing off the support level, it hugged it with volume again on the light side. The longer a support level holds, particularly on declining volume, the more likely it is to give way. When you also have larger time frame resistance, such as the prior daily high in the Dow, that breakdown will often be much more rapid than the move into the support was to begin with.

On such a steep initial breakdown into the afternoon following a strong morning, the market typically just keeps selling off. It becomes rather dangerous to try to go against that trend since most of the time the market will close at or right near intraday lows. The market experienced an exhaustion move on the 5 minute charts going into the 15 minute 200 sma support in the SP500 and Dow. This was also after three waves of selling on the 1-2 minute charts, so the indices were due for at least a slightly longer correction at that time. The indices tried to hold the lows, but the 5 minute 20 sma resistance zone, combined with the price resistance from the start of the last segment of selling on the 2 minute charts, held it down. The bears continued to lead the market lower into the close, but at a more gradual pace than before.

Despite the late day selloff, most of the swingtrade positions I've been following held up pretty well. Some of them I have been following here and are as follows: AAP from the $51.88 zone on the 4/25 hit new highs of $62.90. Trailing stop initiated for position trades. ASKJ has highs of $31.86 from the 5/18 breakout. Tight trailing stop initiated. Some hit Tuesday's afternoon. LCAV triggered a continuation on 5/20 over $41.50, higher than the prior day due to the gap. It hit highs of $48.63. Some trailing stops hit on Tuesday. CI triggered on 5/26 with the break of $97.55 and has highs of $101.23. Trailing stops now initiated. UNH from last Wednesday from the $49.40 zone has highs of $52.49 with some trailing stops hit. RT, GR, WLP and OVTI are still mainly holding their ranges. IGT and EL are still of interest.

Economic Reports and Events
Jun 08: Wholesale Inventories for Apr (10:00 am)
Jun 09: Initial Claims 06/04 (8:30 am)
Jun 10: Export Prices ex-ag. For may (8:30 am), Import Prices ex-oil for May (8:30 am), Trade Balance for Apr (8:30 am), Treasury Budget for May (2:00 pm)
Jun 13: -
Jun 14: Core PPI for May (8:30 am), PPI for May (8:30 am), Retail Sales for May (8:30 am), Retail Sales ex-auto for May (8:30 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 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
Jun 08: CMTL (B), HRB (4:00 pm ET)
Jun 09: FNSR (A), NSM (?), NAV (B), TOY (?)
Jun 10: -
Jun 13: -
Jun 14: BBY (?), BMC (?), PIR (?)

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.