Good morning! The market had a very nice trading day on Wednesday. It began with a fairly large gap down following Intel and Yahoo's earnings, but the indices opened right into strong support, especially in the NASDAQ, which came into the prior day's open as well as the 5 minute 200 sma. While the SP500 and Dow Jones Ind. Ave. had a bit more room to sell off for the first 45 minutes or so of the day, their downside action was slow and choppy and the support from Monday's lows and the 15 minute 200 sma held very well, leading to a pivot higher out of the 10:15 ET reversal period.

The market turned over slowly but surely, breaking out more strongly just after 11:00 ET. The SP500 and NASDAQ both managed to fill their gap zones while the Dow came back to morning highs and its 5 minute 200 sma and 15 minute 20 sma resistance. These hit at about 11:30 ET and the market fell into a narrow trading range over noon. With volume dropping and the range holding right at intraday highs, an upside resolution to the base was most likely. This took place coming out of the 13:00 ET reversal period and brought all three indices into new intraday highs, putting in an equal move on the 5 minute charts as compared to the initial rally off 10:15 ET lows that occurred before the base.

The new intraday highs in the NASDAQ also meant new daily highs. This is again very comparable to the May action we have been looking at over the past few days as a reference point for further upside. As the resistance hit at 13:30 ET with the Dow coming Tuesday's highs, the market again began to correct. The move was slow and volume dropped off once more. Since the base was so short as compared to the mid-day one, however, and the market had already put in an equal move on the 15 minute charts, I was not looking at this flag for more than a scalp since the odds were much higher for a 2T. This happened on the 5 minute charts as all three indices put in only slightly higher highs, trapping anyone trying to buy a new daily high, before pulling back into the 15:00 ET reversal period.

The pullback out of the 2T created the comparable correction given the mid-day action and, as the support hit, the market pivoted and began to climb higher into the close. This made for a third move intraday on the 5 and 15 minute charts and the indices once again put in an equal move on the 5 minute charts before the end of the day.

Typically following a three wave move, the market will have to create a larger correction than the prior two before it can continue. This is what I am expecting heading into Thursday. As a whole though, the NASDAQ has room to move on the daily charts up to the highs from the end of last year where it will hit strong price resistance. It would also be an equal move zone on the weekly charts as compared to the May rally. I have not been finding strong swingtrade patterns yet this week, so continue to use more caution on those. I do have VAR from yesterday and it closed very nicely. I'm looking for $42-$44 on it over the next couple of weeks.

Economic Reports and Events
July 21: Initial Claims 07/16 (8:30 am), Leading Indicators for Jun (10:00 am), Philadelphia Fed for July (12:00 am), FOMC Minutes (2:00 pm)
July 22: -
July 25: Existing Home Sales for Jun (10:00 am)
July 26: Consumer Confidence for July (10:00 am)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stocks' earnings dates before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
July 21: AFFX (?), AWA (?), ABC (B), AH (A), BAX (B), BRCM (A), CAT (B), CLS (a), CX (B), CPWR (A), CAM (B), CY (B), DHI (B), DHR (B), DAL (?), DOV (A), DJ (B), LLY (B), EMC (B), ENDP (B), FISV (A), FLIR (B), FDRY (A), GNSS (A), GOOG (?), GDT (?), HLIT (A), HTCH (A), HYSL (A), ITW (B), INFA (A), IR (B), IGT (B), ISIL (A), XXIA (a), JBLU (B), JCI (B), LVLT (?), MCD (B), MEDI (?), MRK (B), MSFT (A), NXTL (B), NOK (?), NCX (B), NUE (?), ODP (B), PKTR (A), PMCS (?), PVN (A), RBK (B), RHI (A), ROH (B), RSAS (A), SNDK (?), SAP (B), SBC (08:00 am ET), SGP (B), SFA (A), SHW (B), SIMG (B), SWKS (A), SLM (B), SDS (A), SY (B), ERICY (01:30 am ET), TPX 8A), TXT (B), KO (B), NYT (B), TMA (A), TQNT (?), UCBH (?), UNP (?), UPS (B), VIGN (07:30 am ET), VTSS (A), WY (B), WHR (06:00 am ET), XLNX (?), ZION (A)
July 22: BDX (B), CMI (B), EXC (B), FO (B), FPL (B), HAL (B), KMB (?), MYG (B), OXY (?), SLB (B), SLAB (B)
July 25: ACE (A), ALTR (4:15 pm ET), APCC (A), ACI (B), ASH (B), AV (A), AVP (?), BLS (08:00 am ET), CD (A), CNET (A), DST (A), ECL (B), LNCR (?), MVK (A), NFLX (A), OMM (A), ONNN (A), PBI (4:00 pm ET), PCL (?), PLAY (A), DGX (B), SII (B), TXN (A), TRI (B), VRSO (A), XRX (B), AFL (A), AGR (?), AAI (B), AKS (B), AKAM (A), AW (A), AMZN (A), ATML (A), ADP (B), BIIB (A), BSTE (A), BJS (B), BDK (B), BYD (?), BP (02:00 am ET), BNI (B), CTX (A), CME (B), CB (A), CTXS (A), GLW (A), CFC (?), DD (B), ELNK (B), ERTS (A), ESV (?), FLEX (A), HMA (B), IMCL (?), N (B), INSP (a), ISSI (?), IP (B), LLL (B), LAB (B), LCAV (B), LXK (B), LLTC (?), LMT (B), MHS (B), MCHP (A), NWAC (B), PKI (A), PNM 8A), PPP (?), RFMD (A), SWY (?), SANM (A), SEBL (A), SGTL (A), SSTI (A), SSCC (B), SO (B), SWN (A), HOT (B), STM (A), STK (?), SUNW (?), TMX (A), MHP (B), TMO (A), TDW (B), TSM (08:00 am ET), X (?), VLO (?), WOOF (A), VZ (B), WAT (B), ZRAN (?)

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.