Good day! Trading remained mixed on Tuesday. The market gapped higher into the open and continued for the first couple of minutes before hitting strong resistance from prior intraday highs over the course of the last two trading days. As soon as those levels hit, however, the market turned back over again. The Nasdaq Composite remained the strongest of the three indices, but the Nasdaq, S&P 500 and Dow Jones Ind. Ave. all experienced steady selling shortly after the open. The descent took the Dow back into Monday's lows and the Nasdaq into its 15 minute 20 simple moving average before stalling at support just before 10:30 ET.

The pace of the decline was not very extreme because there was a lot of overlap in prices from bar to bar on the 5 minute charts going into the support. This allowed for a modest bounce into 11:00 ET that took the indices back near highs. The Nasdaq had a very slightly higher high, creating a type of double-top trap pattern I call a 2T. It's a reversal pattern, but tends to have the strongest follow-through when the second high is made on slower momentum than the first. That was not the case here, however, so the reversal used another pattern in the form of an Avalanche, where it based along the 5 minute 20 sma and then broke lower, to help increase the downside momentum.

The selloff over lunch on Tuesday had a wider trading channel than the downside earlier in the day, but the results were still very steady. The Nasdaq experienced an exhaustion bar into 12:35 ET which brought it quickly into strong support on the 15 minute charts at the 200 sma, but the S&P 500 and Dow did not have a similar exhaustion move. As a result, they were able to continue selling steadily into the 13:00 ET reversal period, while the Nasdaq established a triangle reversal pattern on the 5 minute charts. In the S&Ps and Dow, the pattern created that led to reversals in those indices was a small reverse head and shoulders pattern from 12:30-13:30 ET. The right shoulder, also called a Phoenix, broke higher at the same time as the Nasdaq's triangle at 13:30 ET. The lighter volume just ahead of this trigger helped create confirmation since the volume had been higher on the prior declines.

Trading was a great deal more erratic during the middle of the afternoon. The trading channel was again expanding. Volume remained lighter at that point, even on some of the faster drops in the range. I used the opportunity to take the Nasdaq EMini (NQ) long at 1734.25 just after 14:30 ET as the market continued to round off from the afternoon lows. The pace didn't pick up again, however, until about 15:15 ET when the range finally broke higher. The momentum was enough to take the indices back into the zone of the morning highs, where they held for the remainder of the session.

Thanks to the morning reversal, the market managed to hang on once again for the second day in a row, closing virtually unchanged after taking out the prior day's lows. The Nasdaq Composite rose 2.94 points, the S&P 500 rose 0.01 point, and the Dow Jones Ind. Ave. fell 5.77 points. Energy stocks, oil services, and biotechs were able to display the best relative strength, while homebuilders, transportation stocks and pharmaceuticals saw the most pressure.

I still feel that the market has a shot at that upside flush I was originally hoping to see last week before we get a larger correction on the weekly time frame. The congestion into this week has not displayed a sharp bias for downside on anything more than just solitary waves of selling on the 15 minute charts, nor has the downside seen much volume yet. My focus remains on trading intraday setups with fewer exceptions for longer term trade entries.

Economic Reports and Events
Nov. 1: Auto and Truck Sales for Oct. (12:00 am), Construction Spending for Sep. (10:00 am, ISM Index for Oct. (10:00 am), Crude Inventories 10/27 (10:30 am)
Nov. 2: Initial Claims 10/28 (8:30 am), Productivity-Prel. for Q3 (8:30 am), Factory Orders for Sep. (10:00 am)
Nov. 3: Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek for Oct. (8:30 am), ISM Services 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.
Nov. 1: TFSM, AG, ALXN, AGN, AW, DOX, AOC, WTR, AIZ, ACLS, BIDU, BMRN, CAI, ELY, CAM, CNQ, CBEY, CRDN, CI, CINF, CLX, CNO, DVA, DNR, XRAY, DVN, DIOD, D, BOOM, EDS, ESS, FIC, GRMN, GPRO, GSF, GES, HOC, IDCC, ITRI, KND, KYPH, LVS, MMC, MA, MXIM, MWV, MIL, MYL, NFP, NHP, NLS, NEM, NBL, OGE, OKE, OSUR, PMTC, PKD, PTEN, PGH, PXD, PLXS, PRU, PEG, PWEI, QDEL, H, COL, SWKS, SMSI, STXN, SUN, STKL, SHO, SUPG,  TSRA, SVM, TWX, TRN, UHCO, UNM, VCLK, WRNC, WCG, WYN
Nov. 2: ACOR, AAP, AGU, APCC, ABC, AIV, AQNT, ILA, AVNX, ABX, BDX, BBI, BWNG, CA, CMX, CBS, CNP, CTL, CEPH, CPHD, CEM, CQB, CBB, CMS, COGT, CTSH, CSC, ED, CS, CROX, CVS, ERTS, HLTH, ENCY, ENR, ENTG, ENZN, FBR, GWT, GMST, GLBL, HS, HTCH, HYC, ICOS, INCY, ICE, IFF, IP, IRF, ICGE, MDR, MGM, NKTR, NSTC, NBIX, NSR, NEW, NXL, NI, OSG, PAAS, PDLI, PRFT, PQ, PDC, PWAV, PSA, QCOM, PWR, ROIAK, GOLD, RYI, TSG, SGMS, SRE, SINA, SIX, SFC, STN, SFY, BRLC, TLM, TSYS, TSO, PMI, THE, RIG, UN, UVN, USU, VRX, VPHM, WLT, WEBM, WDC, WLK, WFMI, WMBS
Nov. 3: AEE, DUK, EGO, HPOL, HNT, HRP, KSE, MHS, NRG, OMG, PGN, SRP, TTI, THQI, WR
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.