Good morning! The indices rose throughout the afterhours trading on Thursday morning as many of the foreign markets attempt to recover. This led to a rather substantial gap higher into the morning. All three of the indices opened near the highs of the previous day and right at the 15 minute 200 simple moving average resistance. This increased momentum, even with just the opening action, is easing the market into a potential trading range on the daily and weekly time frames as opposed to any immediate continuation pattern on the downside. It is still a little too early to tell though, since it will typically take at least a 50% retracement off the lows to accomplish such a pattern and the overall momentum is still more gradual coming off Monday's lows.

The pace intraday was rather indecisive throughout most of the session. The resistance which hit at the open led to a bit of a pullback in the Nasdaq and base in the S&P 500 and Dow Jones Ind. Average for the first 30-45 minutes. By 10:15 ET the indices were pushing higher. I had a difficult time again finding a lot for intraday setups in individual securities. The market continued to see more of the thinner, lesser-known stocks making the top gainers and losers lists, which reflected the ongoing higher risk that had been around throughout most of the week.

The pace in each of the upside moves throughout the remainder of the morning and early afternoon slowly turned around. Even though the market tested highs for a third time into 14:00 ET, in order to bust through them and move higher like on Tuesday, the momentum would simply had to have to built upon itself, breaking the upper trend channel from the move in place since around 13:00 ET. Otherwise, it would succumb to the slower upside pace and break strongly lower, such as on Wednesday afternoon. Volume remained lighter even though the market tried to push up forward on the 1-2 minute charts, favoring a bearish move.

As the 14:00 ET reversal period hit the market made up its mind and the indices crashed. A strong continuation pattern increased the selling into 14:30 ET. Support hit as the indices began to fill the gap zone and came into the 5 minute 200 sma support. This held perfectly in the S&Ps and Dow with a bit of an influx in momentum. This was also the 15 minute 200 sma support zone. Even though the strength of the selling would make it difficult for the buyers to come back around, the market managed to move off the support enough to hold up and base into the close.

The Dow ($INDU) ended up gaining 68.25 points on Thursday, while the S&P 500 ($SPX) rose 9.92 points and the Nasdaq Composite ($COMPX) climbed 13.09 points. If the market starts to pick up over the next couple of days then it's going to favor a larger trading range on the daily charts. If the indices remain weaker, however, then it will be easier for them to drop into the 200 period sma on the daily charts before rounding off and bouncing back higher.







Economic Reports and Events This Week
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
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.