Good day! Even though the volume picked up on Tuesday as compared to the prior day of trading, the market continued to show a great deal of hesitation out of the open. The congestion along the closing lows broke down out of the 9:45 ET reversal period, but the selling was choppy until finally hitting support at 10:30 ET from the middle of the trading channel from last week. This was also the 5 minute 200 simple moving average intraday and 15 minute 200 sma on the all-sessions charts of the index futures. The market rounded off slightly at this support and then began a steady climb throughout much of what was left of the morning.

Upon hitting prior highs on the 15 minute charts from Monday afternoon, the morning rally came to a close. The upside had a lot of overlap from bar to bar, but the indices would soon fall into a smoother trend intraday. After turning over, the indices began to hug their 5 minute 20 simple moving averages. Declining volume along this support and into the 12:00 ET reversal period indicated a good chance for an Avalanche breakdown. This move had the strongest follow through on the day, quickly bringing the market back into the morning support levels right at the 12:30 ET reversal period.

When the market corrected off the early afternoon lows, the volume once again fell and the indices hugged the support. This created a bear flag which led to a new low on the day. The Nasdaq Composite experienced the strongest selling. Once again support from the prior couple of days held and since this was the third wave of selling on this early afternoon trend, it indicated a strong potential for the lows to hold so that the market could take a break and recover from the decline. That recovery took its cue from the morning trading and, although the pace was steady, the uptrend was very choppy as the market made its way back to the zone of the morning highs.

The Dow Jones Ind. Average ($DJI) gained 9.36 points on Tuesday, while the S&P 500 ($SPX) climbed 2.76 points and the Nasdaq Composite ($COMPX) added 3.66 points. Among the top gainers were the home builders which experienced a slew of upgrades in TOL, DHI, and SPF. Energy and oil services stocks also performed well. Top stocks on the day included IMCL, AEP, MEE, ROH, AXP, INTC, T, PMTC, SWFT, SHLD, and GM. The networkers and biotech sectors had a more difficult time and lost ground. The individual losers on the day included MON, DD, MO, CIEND and SHPGY. My outlook remains the same as the last couple of days. I would like to see a stronger test of the Nasdaq weekly resistance, which is likely over the next couple of days, and then I am expecting ar larger correction on the weekly time frame.

Economic Reports and Events
Oct. 11: Crude Inventories 10/06 (10:30 am), FOMC Minutes Sep. 20 (2:00 pm)
Oct. 12: Initial Claims 10/07 (8:30 am), Trade Balance for Aug. (8:30 am), Fed's Beige Book (2:00 pm)
Oct. 13: Export Prices ex-ag, Import Prices ex-oil, Retail Sales, & Retail Sales ex-auto for Sept. (8:30 am), Michigan Sentiment-Prel. for Oct. (9:50 am), Business Inventories for Aug. (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.
Oct. 11: ACGY, GCI, HST, LRCX, MON, YUM
Oct. 12: COST, GENZ, JRC, MTG, PEP, PII, SWY, WGO
Oct. 13: FNFG, GE, PKX, RF
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.