Good day! As trading began on Tuesday, I was looking for more upside into February's highs, watching for reversal action intraday (as per yesterday's commentary.) The market did a great job following through on this bias. The indices had gapped higher into the open after 8:30 CPI data popped the futures higher in the premarket. The market did pull down off the premarket highs by the open though, as they started to have a more difficult time holding onto gains. The indices then continued lower into the 9:45 ET correction period, closing the gap before bouncing off that support level.

As the market headed higher throughout the morning, it had a very difficult time maintaining any momentum. This was the clue I mentioned yesterday to watch for an afternoon reversal. The indices began to break previous intraday highs by lesser amounts, rounding off at that level when the Dow ran head first into its previous all-time highs from last February. From about 11:15 to 12:00 ET the indices could not shake the 5 minute 20 sma support. This support finally gave way as the afternoon began, coming right out of the 12:00 ET correction period.

The market took back the morning gains a bit more quickly than it made them, doing so with three steady waves of selling into about 13:15 ET. I just mentioned yesterday how common this three waves pattern intraday has been lately and Tuesday brought with it yet another example. The downtrend soon broke, taking the indices back into the 5 minute 20 sma. They stalled there for a bit and then broke free soon after the 14:00 ET reversal period. This took the indices back into the 12:00 ET breakdown zone. It held and the market fell into a range for the remainder of the session.







As Tuesday wound to a close, the Dow ($DJI) had gained 52.58 points, the S&P 500 added 3.01 points, and the Nasdaq ($COMPX) lost 1.38 points. The broker/dealers gave back a lot of the recent gains. Ameritrade was particularly hard-hit, falling 9.2% after falling short of earnings expectations. SCHW also had lowered its outlook. Nevertheless, there is still a little room for more upside on Wednesday, but we're starting to see the upper end of this move on the 90 minute charts, so I'm going to use a lot more caution on anything other than a scalp on the upside heading into Wednesday's session.

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.