Good day! The market faired extremely well on Thursday, aided by strong earnings. Costco (COST) shares rose 7.7% following better-than-expected results. Yum Brands (YUM) also had stellar earnings and climbed 8.3%, thanks in large part to a 26% increase in profits in China. A strong upside gap in the indices that took the market back into the highs of the range opened the door for it as a possibility for that strong breakout we have been waiting on for the past week. After the open, however, the market had a tough time committing.

Immediately following the open, the market pulled back a bit, correcting along the daily resistance. At 10:00 ET the buyers resurfaced, but volume didn't come in to provide strong confirmation. The S&P 500 and particularly the Dow Jones Industrial Average experienced the best action for the morning trading. They continued to trend higher into the 12:00 ET reversal period while the Nasdaq Composite stalled at about 10:15 ET and held those highs until well into the afternoon.

12:00 ET is a typical time of the day for a morning trend to begin to correct and the market began to show signs of weakness at that time. While the indices began to hug the 5 minute 20 simple moving average support, a typical indication of a breakdown building, the drop off highs was not strong enough to turn the pace over completely and the breakdown from the support was unable to gain any momentum to uphold a reversal. Instead the market continued to hold near highs, resulting in a buy setup that I found to be the most identifiable in the S&P 500.

It wasn't until the 2:00 Fed Beige Book came out that the market finally opened up and broke higher. Evidence of expanding economic activity without signs of rising inflation gave market participants the confidence to continue to buy despite the advancement of the trend. This presented itself on the daily charts with the increased upside momentum that is taking the Nasdaq strongly into the price resistance from earlier in the year. The market managed to close just a few ticks shy of the day's highs. The Dow Jones Industrial Average rose 95.57 points (0.8%) on the day. The S&P 500 tacked on 12.88 points (1.0%). The Nasdaq Composite had the strongest percentage gain of 1.6%, adding 37.91 points. On Friday I am expecting the upside to continue, although the afternoon extension on Thursday can create an intraday correction after the first 30-45 minutes or so.

Economic Reports and Events
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)
Oct. 16: NY Empire State Index for Oct. (8:30 am)
Oct. 17: Core PPI and PPI for Sep. (8:30 am), Net Foreign Purchases for Aug. (9:00 am), Capacity Utilization and Industrial Production for Sep. (9:15 ET)
Oct. 18: Building Permits, Core CPI, CPI, and Housing Starts for Sept. (8:30 am), Crude Inventories 10/13 (10:30 am)
Oct. 19: Initial Claims 10/14 (8:30 am), Leading Indicators for Sept. (10:00 am), Philadelphia Fed for Oct. (12:00 pm)
Oct. 20: -

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. 13: FNFG, GE, PKX, RF
Oct. 16: CBH, CCK, ETN, MI, MAT, PPDI, PHG, SONC, TMA, VCP, GWW, WB
Oct. 17: ADTN, ASD, ASO, BOT, CHTR, CSX, EMC, FRX, GAP, HWAY, ILMN, INTC, IBM, JEF, JNJ, KEY, LLTC, MER, MOT, NCC, NVLS, ODP, PKG, SOV, STT, SYK, STI, UTX, WFC, YHOO
Oct. 18: ABT, ADS, AMLN, AAPL, ASML, BSX, COF, CDWC, CIT, CTXS, CNB, CBSS, CBST, ET, EBAY, GD, GPC, ITW, RX, ISIL, JPM, JNPR, KEA, LHO, MEL, MOGN, MGI, NTRS, NCX, JNC, NVEC, OXY, PH, PLCM, RDN, RJF, RYL, SEIC, SSTI, SON, SPSN, STJ, SNV, TCB, TER, ALL, WM
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.