Good morning! The market had another choppy day on Wednesday, but the intraday action was a bit more generous with some larger swings on the 5 and 15 minute charts. The day ended with a loss of 15.14 points in the Dow Jones Ind. Ave. ($INDU), 3.44 points in the S&P 500 ($SPX), and 10.50 points in the Nasdaq Composite ($COMPX). It spent most of the day, however, bouncing back and forth within a larger range on the 15 minute time frame.

The Dow had the strongest action on Wednesday throughout most of the session. Some of the top gainers were Boeing Co. (BA), Caterpillar Inc. (CAT), and Hewlett-Packard Co. (HPQ). This led to new highs on the week in the Dow, but the Nasdaq was noticeably lagging. Even though all three indices pulled back off highs following the 9:45 ET correction period, the Nasdaq was the only one to bust its 15 minute 20 sma support. The market climbed again into 10:45 ET, but the pace was more gradual overall in the Nasdaq and this just created a 5 minute bear flag when it came back into the opening prices. The stronger Dow and S&Ps formed short patterns as well with 2T double tops and the market fell into 11-11:30 ET.

The strong downside momentum made it difficult for the market to correct off lows over noon. It began to compensate by bouncing quickly and then retesting the lows just a few minutes later to help slow the selling, but the return to highs was still just as choppy as in the previous day's trading. There was a lot of overlap on both the 5 and 15 minute time frames and even though it also tried to gain momentum as it had in the prior session, it also failed again, turning around into 14:00 ET and pulling back to hug the 5 minute 20 sma support zone.

The base along support on declining volume following the sharp selloff created a pattern I call an Avalanche because of the swift follow through it will often have. I was not at all confident that the market could actually muster up enough conviction for a strong follow through on Wednesday though. A false start into 15:00 ET quickly took the indices back into their upper trend channel from the base before the support finally gave way around 15:15 into 15:30 ET. It soon hit an equal move as compared to the initial drop from highs and then formed a small continuation on the 1 minute charts that led to a drop back into the larger 15 minute support from prior lows and the 5 minute 200 sma zones intraday in the indices.







So far the indices are holding that bias for a larger range on the 30 minute charts due to the sharper decline into the end of the day again. As I mentioned yesterday, the middle of Monday's session is going to serve as the first main support on that time frame. In order to hold it though, the pace needs to slow on the selling. A sharper move is going to make it easier for the Dow and S&P 500 to try to push into their 200 day simple moving averages and then form a larger daily correction off that support.

Economic Reports and Events This Week
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
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.