Good morning! Thursday was another mixed day in the market. The first half of the day had a lot of very nice technical setups, offering an optimal trading environment. Support and resistance levels held perfectly and setups followed through well without a lot of chop and overlap.

The day began with the larger correction intraday that we were looking for following three waves of buying intraday on Wednesday. Although the market opened pretty near the prior day's close, it sold off into the NASDAQ and Dow Jones Ind. Ave.'s 5 minute 20 sma within the first few minutes of the day. At that point it fell into a trading range along the support. Volume dropped off, creating a nice Avalanche short setup. The pace within the range was not as bearish as the 5 minute charts were so it took a bit of a false start at 10:00 ET before the pace turned over on the 1-2 minute charts to allow for a stronger breakdown into the 10:15 ET reversal period.

The SP500 and Dow both sold off a great deal more than the NASDAQ coming out of the morning short setup. They both stalled at the 5 minute 200 sma support while the NASDAQ came into the prior afternoon low on the 5 minute charts. The SP500 and Dow both continued the selling, however, after only a brief pause at the 5 minute support. They didn't slow again until the larger 15 minute 200 sma when all three indices came into price support on the 15 minute charts as well.

The larger time frame support held very well and I began to look for a larger correction over noon. The 11:00 ET reversal period kicked off this correction with the first setup following the pivot. The NASDAQ formed a 2 minute Reverse Head & Shoulders pattern and broke strongly higher, leading all the indices into their first resistance at the 5 minute 20 sma. With the pace now having turned over to favor stronger upside, the market fell into a range along the resistance. Volume dropped off and the range formed the handle of a 15 minute Cup with Handle pattern, breaking higher at the third test of the highs of the range. This is a typical test of resistance for a breakout and the follow through was immediate despite it taking place over noon.

I didn't make it back from lunch in time to catch the 12:30 ET breakout, so it made for a very slow remainder of the day. The 13:00 ET reversal period held very well as the market retested morning highs, but after pivoting at this resistance level, things became very choppy intraday. The selling followed through until the market hit its trend channel support at the 15:00 ET reversal period, but the amount of overlap on the way lower made it difficult to find a lower risk entry to catch a continuation of the reversal if you missed it initially. The 2 minute 20 sma held the trend move lower out of 13:00 ET, but while I was looking for a 5 minute Bear Flag off the 14:00 lows, the market popped more quickly into resistance before continuing lower again off the moving average resistance. Since I missed this higher risk setup, I didn't have any new setups into the close.

VAR from two days ago continues to base at highs. Other than that, I don't have much I am watching for swingtrades still. BCO is of some interest due to the triangle on the daily charts, so I'll watch to see if that can form a triangle intraday as well on the 60 minute charts for an upside breakout. The futures can pretty much go either way on Friday in my opinion. The pace intraday is still more bullish on the 15 minute charts, but it's rounding off at highs on the 60 minute charts, so I'll watch for the intraday action to serve as better guidance since the larger intraday time frames are clashing.

Economic Reports and Events
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 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.