Good day! The market has put in a two-day run to kick off the new week after correcting on sloppy trading into the start of the month. At this point it's looking like the October correction is taking place merely through a slowdown in the overall upside as opposed to any significant correction via price. As on Monday, most of the gains came within the first hour of trading as buyers materialized right out of the open. At one point the Dow met with new all-time highs, sporting a 91 point gain to hit 12,196.32. The remainder of the session was spent trying to hold onto those gains. The end result was another 51.22 points tacked onto the Dow (DJI) on the day, a 9.93 point gain in the Nasdaq Composite ($COMPX), and a 3.06 gain in the S&P 500.

The morning momentum played a large role in the indices being able to again close positively. The pace meant that for strong selling to come in, the indices would need to round off at the highs to slowly allow that momentum to turn over. This is the action we experienced throughout the middle of the day as new attempts at highs were made on light volume and never lasted for more than a few minutes at a time before returning right back into the lows of the mid-day range. 

The final move back into lows hit just before 13:30 ET and this time around the correction off that support was unable to reach the highs of the range. Instead the bounce was again on light volume and held the 5 minute 20 simple moving average support level. When the 14:00 ET reversal period hit that support gave way and the bears made a fair attempt to re-take the lead it had given up Monday morning.

I started watching for a 5 minute bear flag at that time, but the Dow and Nasdaq didn't flush quite enough to the downside, so the market was able to retrace a good chunk of the prior decline before stalling at resistance at the 15:00 ET reversal period. This larger retracement of the prior 5 minute selloff meant that the indices were able to find some support in the zone of the prior low and had to make a second attempt at breaking them. Ideally the indices would have hugged that 15:15 ET price zone on that retest, but they again retraced more than 50% of the prior drop at 15:00 ET and were unable to establish a new afternoon low into the close in both the Nasdaq and S&Ps.

As the week progresses, we should start to see some more back and forth action within the day as opposed to having most of the action occurring in the first hour. Instead I am looking for more of a wider range on the 15 and 30 minute charts and a slowdown in the upside moves. There have been two moves higher on the 15 minute charts since last week's lows. There is room for a third on Wednesday, but I would expect it to be more gradual than the prior two.

Economic Reports and Events
Nov. 8: Crude Inventories 11/03 (10:30 am)
Nov. 9: Export Prices ex-ag. and Import Prices ex-oil for Oct. (8:30 am), Initial Claims 11/04 (8:30 am), Trade Balance for Sep. (8:30 am), Wholesale Inventories for Sep. (10:00 am)
Nov. 10: -

Key Earnings Announcements
Nov. 8:  ARTX, BRL, CVC, DEPO, DTV, FD, HGSI, DISK, SIRI, TRMA, BORL, CELL, CSCO, ERES, CELL, JUPM, IPAR, SLNK, OVEN, and ZIPR
Nov. 9:  BIVN, CNTY, FLO, GIGM, HANS, IMAX, MRGE, TXU, URBN, JOBS, COGO, ECLG, DIET, EXPE, KSS, SNDA, and DIS
Nov. 10: SIL, ERF, HEW, IAG, PBR, CXW
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.