Good day! Wednesday was a rough day for the bulls. The slowing that we were looking at on the upside heading into the week finally gave way to some stronger downside and began to do so early on. The index futures had managed to take back the afterhours losses from Tuesday evening by climbing steadily throughout the early morning hours, but the gains quickly slipped right through their fingers again once the opening bell rang. The session began relatively unchanged but then broke the intraday uptrend from the prior afternoon on strong selling, taking back that entire upside move within just the first 15 minutes of trading.
 
The indices did find some support initially at the previous lows on the 30 minute charts from the last couple of days, but the momentum had finally turned. The upside was slower and the downside stronger on that time frame and after a brief correction into the 10:15 ET reversal period the indices broke through the support. A third wave of selling followed at 10:45 ET into the 11:00 ET correction period. Since each correction within this trend took a different amount of time to form, there was not as strong of chance for a larger trend reversal. It did hold well though and the indices pulled slowly higher throughout mid-day and into the middle of the afternoon as volume declined again ahead of the 14:00 FOMC Minutes.

The indices began to show a bias towards breaking lower just prior to the 14:00 ET FOMC Minutes. They had just ran into strong resistance at the 15 minute 20 sma intraday after three small waves of buying. The sellers showed restraint, however, until the news hit and then the bears took over again with a vengeance. The Nasdaq and S&P 500 fell into their 15 minute 200 sma support while the Dow dropped into its morning lows. This support zone held for about half an hour and then the pace began to try to turn back over. A slower wave of selling was followed by a pivot off lows around 14:45 ET and steady but choppy buying into the close.







By the end of the session the Dow Jones Ind. Ave. ($DJI) fell 89.23 points (-0.7%). The S&P 500 ($SPX) and the Nasdaq Composite ($COMPX) also lost 0.7%. This meant a 9.52 point drop in the S&Ps and an 18.30 point loss in the Nasdaq. I don't expect quite as large of a range on Thursday. While I do think the market will continue to hold the correction off this week's highs, there is a lot of support with many of the daily moving averages all converging in the indices and that is likely to slow the momentum on the correction and create a move with more overlap from day to day.

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.