Good day! I hope you have had a great trading week so far! The market is still going strong after breaking that monumental 12K mark in the Dow Jones Ind. Average last week. Thursday got off to a weak start after gapping slightly higher though. The gap took the Nasdaq right smack into the prior highs from Monday morning and that served as strong resistance to help kick off the pullback. The pace was slow to begin with, gradually sliding into 5 minute 20 simple moving average support. It stalled at that zone only briefly, however, before breaking at increased momentum to new intraday lows.

The market established an exhaustion bar on the smaller 1-2 minutes time frames just before 10:30 ET with an increased trading range and accelerated volume. The extreme pace made a strong recovery very difficult until the indices started to round off at the lows, establishing slightly lower lows into the 10:45 ET reversal period. Even then the market still moved higher at a much more gradual pace than the prior selloff.  The 5 minute 20 sma served as resistance around 10:45 ET for about 30 minutes and that helped increase the pace to the upside at 12:00 ET, but it was not a long enough correction along that 20 sma to allow the buyers to come back in full force. Instead the market stalled at resistance from earlier in the morning and fell into another range lasting about an hour.

Volume declined during the early afternoon as the indices held a range near the highs of the day in the Nasdaq. The breakout at 13:30 ET took this index to new intraday highs while the S&P 500 and Dow Jones Industrial Average used this opportunity to return to their own morning highs. Unfortunately, the slower pace in the Dow in particular made it very difficult for that index to break above that level, even though it still managed another record close. The Nasdaq and S&Ps did make new highs into the afternoon, but the market remained very choppy and it was rather difficult to find decent intraday setups. The last 90 minutes of the day were stuck in a trading range, but they still managed to hold near the highs.

The Dow Jones Industrial Average gained 28.98 points (0.2%) on Thursday.  The S&P 500 saw a gain of 6.86 points (0.5%). The Nasdaq Composite had the strongest day of the three, closing higher by 22.51 points, or 1%. Stocks showing some of the best gains on the day included AET (+7.4%), OMX (+3.9%), BDK (+4.8%), and CMCSA (+3.2%). Top losers were RHAT (-24%) and BA (-2.1%). On the housing front, the median sales price of a new home fell 9.7% over the course of the past 12 months ending in September. This is the sharpest decline in more than 35 years. New homes sales did rise 5.3% in September, but June, July, and August sales were all revised lower.

The market is still looking higher as earnings season continues. The more gradual pace with the high degree of overlap on the trend from 10:45 ET am on Thursday, however, can make it easy for the indices to experience rapid intraday flushes to the downside. I would like to see a stronger upside momentum move that shows up on the daily charts before looking for a larger market reversal. Without this exhaustion move it's going to be higher risk to go against the trend other than for short term setups at this time. The prior highs on the year in the Nasdaq will remain resistance.

Economic Reports and Events
Oct. 27: Chain Deflator-Adv. for Q3 (8:30 am), GDP-Adv. for Q3 (8:30 am), Michigan Sentiment-Rev for Oct. (9:50 am)
Oct. 30: Personal Income for Sept. (8:30 am), Personal Spending for Sept. (8:30 am)
Oct. 31: Employment Cost Index Q3 (8:30 am), Chicago PMI for Oct. (10:00 pm), Consumer Confidence for Oct. (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. 27: AT, AXL, AFR, AVP, BHI, BWA, BC, BPL, CAH, CVX, CHT, CEG, CVH, DO, EEP, ESST, EXC, FMX, FO, HUN, IR, ITT, KCI, NOV, ORB, PNW
Oct. 30: ADPT, ALO, AMMD, AU, ASH, BEAV, CCU, BVN, CCUR, CVA, ECLP, FPL, GOL, GW, HUM, JKHY, KIM, MET, MSPD, NXG, OIS, RACK, RCII, RTI, SPG, SKYW, STO, SPN, SBL, SYY, PFG, TRI, UDR, VZ, VMC, WRI
Oct. 31: AGR, AL, ACAS, AEP, ADM, ADP, ITU, BIIB, BJS, CCJ, CE, CHTR, CMI, CVTX, DPL, EXP, EK, ETR, EOG, EOP, EQR, IT, HMY, HLX, HLT, IACI, JLL, KSU, LTR, MRO, MLM, MAS, MCK, OII, OCR, ORCT, OSK, PRGO, PNC, PPL, PG, KWK, Q, RDC, RCL, SAFC, SNY, SMI, SGY, JOE, UAUA, UBS, UPL, UARN, URI, X, UTHR, VLO, VSH, VC, VNO
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.