Good day! We got the correction we were looking for on Monday. As expected though, it took an intraday setup before the market was able to turn over, and once it did, the pace was more gradual than the prior buying. The day began with a bit of downside into the open, but 5 minute 20 sma support on the all sessions charts of the futures held and the market pulled up to retest highs. Here is where we saw our reversal pattern initially with the Dow Jones Ind. Ave. trying to a double top with the SP500 forming a 2T reversal. As we've seen lately, the NASDAQ served as the index with the least relative strength while the Dow held up pretty well.

The indices found support as they came into the 5 minute 20 sma support. Here we saw a very small base before the support gave way. The NASDAQ fell rapidly into equal move support and 15 minute 20 sma support with the 10:45 ET reversal period. This helped to stall the selling in the other two. The SP500 managed to then form another 5 minute 2T reversal pattern while the NASDAQ held the 5 minute 20 sma resistance and fell into a triangle. The SP's pattern broke around 11:30, but the NASDAQ triangle held off until the 12:00 ET reversal period when it fell into morning lows as the SP500 also sold off into it's lows on the day. The stronger Dow only hit prior 5 minute lows though before its selling stalled and se saw a bit of a pull higher for a Bear Flag going into the 5 minute 20 sma. This triggered with the 13:00 ET reversal period.

The action overall in the market on Monday was pretty choppy, but the morning and early afternoon still held its patterns well. The Bear Flag fell to put in an equal move as compared to prior selling and this completed a third wave of selling intraday in the NASDAQ, making it likely we'd see a larger correction into the late afternoon. This corresponded with the 14:00 ET reversal period, creating a nice pivot pattern that rallied, albeit very slowly, back into the last 5 minute pivot highs where the range became even more choppy, holding the resistance into the close.

On Tuesday the market is still looking to hold up pretty well. With a correction to Friday's action coming in the form of a trading range, it puts the pace bias on the long side still, even though the market has been trending higher for several weeks. With the trend being rather extended and the daily Commodity Channel Index coming into overbought levels, I remain more focused on the intraday action than swingtrades.

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.