Good morning! Instead of a late day surge like I mentioned on Monday to watch out for Tuesday, the market gapped up higher into the open to use up that momentum. The indices then made it seem likely that a range holding Monday's range would be probable with a bullish breakout bias from that range since the retest of the zone from the prior day's highs meant that the market was rounding off at the lows... at least intraday. Unfortunately, even though that is what happened, it didn't make it any easier to actually trade! Although the volume continued to decline on Tuesday, the market was even choppier than it had been the last couple of trading. To do well, a trader essentially had to just buy and hold or just place orders off the 5 minute 20 sma support and be willing to accept the risk that with such an uptrend the market can very easily turn suddenly, with very little notice, and fall apart.

Unfortunately, my timing on the day was a little off in the morning... The market had opened wedged between support and resistance levels intraday. The 15 minute 20 simple moving average and pivot highs from the prior afternoon on the 5 minute charts served as support. On the upper end was the 5 minute 200 sma and prior 15 minute highs as resistance. Knowing I was probably a bit early and would have to wait for the range to develop further, but betting on it holding the 10:15 ET lows in the range, I took a small position on the long side in the indices when it came into initial support at that time. Although it started to pop out of the reversal period, it began to turn over without making it back into the highs of the range so I bailed with a small 3/4 point loss on the ES.

Sure enough, the indices flushed the prior lows intraday, turning over finally with the 11-11:15 correction periods. Instead of taking that channel break though, I decided to wait for a smaller base to confirm the change of momentum... Unfortunately, that opportunity never came.

Even as the market fell into consolidations along the highs, they made slightly higher highs within the ranges, which makes them higher risk for failure. The result was a steady uptrend throughout the trading day, but a highly choppy one. Since it was my first full day back in the markets in about a week, I didn't want to press my luck. My bias remained bullish, but my trigger finger just couldn't muster up the courage to relieve the itch! I couldn't get the thought out of my head to "just wait for the risk to lesson, because this could just as easily trigger and then turn around hard."

The momentum did increase in the upside into the final hour of trading, but the move was brief. The indices popped back into the trading range from last Friday morning, lasting for about 20 minutes, before it pullback back again into the close. Throughout the day the 5 minute 20 sma served as support and it did so again in the final thirty minutes of trading, despite one of the sharpest downside moves of the day.







The great thing is that there are always going to be other chances, so when things are highly choppy and not giving enough pros to suit my style, my modus operandi is to move aside and wait for those opportunities. Often a day like Tuesday is followed by one with stronger action back and forth that will make scalping and shorter term daytrading more favorable. The indices rounded off at lows on the 120 minute charts and I am expecting to see some pullback action intraday shortly after the open on Wednesday, even though there is a little more room it can try higher before it does so. On any selling the choppiest segment of trading from the last two days on the larger intraday charts is going to be support. This is going to be right about the middle of Monday's daily range. The trading range from the 28th is the next resistance in the 60 minute 20 sma zone.

Economic Reports and Events This Week
Wednesday: Crude Inventories 3/2 (10:30 am), Fed's Beige Book (2:00), Consumer Credit for Jan. (3:00 pm)
Thursday: Initial Claims 3/3 (8:30 am)
Friday: Average Workweek, Hourly Earnings, Nonfarm Payrolls, and Unemployment Rate for Feb. (8:30 am), Trade Balance for Jan. (8:30 am), Wholesale Inventories for Jan. (10:00 am)

Key Earnings Announcements This Week
Wednesday: AEOS, BJ, CNQ, CWTR, RIO, CPA, FLML, FCEL, HMIN, KTO, MAMA, MATK, MW, PVX, SFNT, SKS, TLB, TIVO, WON
Thursday: AEG, ALTI, CNE, COST, FLE, GMKT, GG, HOV, ISIS, JUPM, NSM, NTO, SFE, TECD, TNE, OVEN, URBN, WIND, XOMA
Friday: BIG, ENCY
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance and Briefing.com. Occasionally changes will occur that are made after the posting of this column. This list is not a complete list of earnings, so always double check your positions!

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.