Good morning!  Choppy trading permeated the market throughout most of the morning after the indices opened a few ticks higher to start the day on Wednesday. This is not at all unusual given the extent of Tuesday's selling and pivot trades faired nicely for the 45 minutes or so in the indices. The mid-level support and resistance zones held perfectly with a lot of them hitting from the previous afternoon to provide some decent back and forth moves on the smaller 1-5 minute time frames. After the 10:15 ET reversal period, however, this began to change. Usually when pivots hold well, they start to be more tricky following about three or four moves and the result was a return to some of the more choppy intraday action we've been seeing a lot of lately. Within the chop though, a bearish bias prevailed and the indices did manage to increase momentum in that favor heading into noon.

The morning descent accelerated until it ran into support at the lows made a couple of weeks back. Volume also increased and would remain strong throughout the rest of the session. The price support held very well though and after a second test of it the buyers returned. This roughly corresponded to the 13:00 ET correction period and the momentum coming off those second intraday lows on the 5 minute time frame was very strong, sustaining itself longer during that initial bounce than any of the previous selling had.

The initial move off the early afternoon lows took back the losses on the day in only a matter of about 30 minutes or so of trading. With very little hesitation, the indices were back in the area of the morning congestion. The market became a bit choppy at that point, but corrected into the 5 minute 20 sma support zone heading into the 14:00 correction period. At that point the buyers returned. The Nasdaq led the way and was soon trading at new intraday highs. After hitting an equal move at the same time at the 5 and 15 minute 200 sma, corresponding to the intraday highs in the Dow, the indices again corrected. Once more it was also on the sloppy side, retesting the highs, but failing to bust through all the overhead resistance before the closing bell rang.

By the end of the day the indices had done a fairly decent job of taking back the lost ground. At one point the Dow ($DJI) had been down 135 points, but it ended higher by 57.33 at 12,1333.40 (+0.5%). The S&P 500 ($SPX) climbed 9.22 points, closing higher by 0.7%, while the Nasdaq Composite ($COMPX) saw the greatest relative increase, up 21.17 points, or +0.9%. The support/resistance levels that we've been following over the past couple of days with the 20 and 50 day sma overhead and 200 day sma underneath it remain the strongest level to watch out for when it comes to corrections on the larger time frames.







Economic Reports and Events This Week
Thursday:
8:30a.m. Initial Jobless Claims. Previous: -10K.
8:30a.m. Feb Producer Price Index. Previous: -0.6%.
8:30a.m Feb Producer Price Index, Ex-Food & Energy. Previous: +0.2%.
8:30a.m. Mar NY Fed Manufacturing Index. Previous: 24.35.
9:00a.m. Jan Treasury Intl Capital Flows. Previous: -$11.0B.
10:00a.m. DJ-BTMU Business Barometer. Previous: -0.2%.
10:00a.m Mar Philadelphia Fed Business Index. Previous: 0.6.
Friday:
8:30a.m. Feb Consumer Price Index. Previous: +0.2%.
8:30a.m. Feb Consumer Price Index, Ex-Food & Energy. Previous: +0.3%.
9:15a.m. Feb Industrial Production. Previous: -0.5%.
9:15a.m. Feb Capacity Utilization. Previous: 81.2%.
10:00a.m. Mid-Mar Reuters/U Of Mich Sentiment Index. Previous: 91.3.

Key Earnings Announcements This Week
Thursday: ARO, BSC, BONT, CLE, LGND, PSUN, TRLG
Friday: ANN, KIRK
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.