Good day! The market continued to correct to recent highs on Wednesday. It began with a bit of a gap up due to the strong selloff the prior afternoon. This was followed by a great deal of choppiness throughout the morning as the market continued to react to the steep drop by falling into a trading range. Volume was light and the gap filled by the 10:45 ET reversal period.

The range continued to narrow going into noon. There was a small 5 minute triangle into the 12:00 ET reversal period that broke higher, but the pace was very gradual and this ended up just creating a larger pennant formation since the prior highs barely broke. The pace turned over even more into the 13:00 ET reversal period and the NASDAQ formed a small double top intraday before dropping sharply off highs. The 15 minute 200 sma in the SP500 and Dow Jones Ind. Ave. held, but the market didn't react much to them. They just led to a trading range on the smaller 1-2 minute charts before dropping into morning lows.

With the move into 14:00 ET the volume picked up dramatically, creating an exhaustion move. Even after the exhaustion bar into morning lows in the SP500 and Dow, the market slid a bit lower until finally hitting the 20 day sma in the NASDAQ with a strong volume surge to complete the move. Since the NASDAQ had hit rather substantial support on the larger time frames, that index didn't have any more room to move until it was able to put in a longer correction to the selling. The SP500 and Dow didn't have that constraint and saw small bear flags going into the 15:00 ET reversal period. At that point the SP500 was hitting prior lows from a few days back as well as the 30 minute 200 sma support. The reversal period held and the market just chopped around for the remainder of the day.

Overall the indices have diverged a great deal on the daily charts. The NASDAQ has sold off sharply since Friday, at a pace much greater than the prior rally. This makes the formation of an Avalanche higher on the daily charts along the 20 day sma. On the other hand, the SP500 is just now turning over on its daily chart, picking up speed and looking to pull back even more, despite the strong NASDAQ support. The Dow doesn't seem to care either way. It's been in the best range for weeks now and, without taking the SP500 or NASDAQ into account, has been forming a rather bullish pattern. So, the NASDAQ looks to stall, the SP500 looks to sell off, and the Dow looks to want to break higher..... Hmmmmm..... It's too bad that even with divergence we aren't likely to see all three get their way. My guess is that the selling wins out since the weekly resistance is strong. Monthly support is stronger, but still leaves plenty of room for more downside into the weekend. I do not have any new positions I am looking at entering due to the daily action.

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 $63.00. Trailing stop initiated for position trades. ASKJ has highs of $32.69 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. 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, EL and OVTI are still holding their ranges. WLP broke 20 day sma support and should not be closed. IGT is still of interest.

Economic Reports and Events
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 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.