Good day! The market managed to hold up pretty nicely on Wednesday after a strong uptrend the day before. The indices needed time to correct from the rally, but the momentum was so strong heading into the close that the overall correction took place more through time than price. The Nasdaq held up the best, gapping higher into the open while the S&Ps opened flat. All three indices began to pull back with the 9:45 ET reversal period. The Nasdaq closed its gap zone and the S&Ps fell to its 15 minute 20 sma support. Even though this selloff was strong, the bounce off those lows was also on good momentum. By retracing back into the morning highs it created the perfect environment to hold the indices in a trading range into the late afternoon.

Even though the overall market had a difficult time establishing any strong intraday trend other than a sideways one, a number of individual stocks repeated the types of moves seen on Tuesday. MTH, TMO and MMM were the three that I focused on, but there were a number of others offering similar opportunities. The risks were still higher though on the larger than average gaps that ruled the market of them just getting stuck and not go anywhere after the opening momentum. This happened to me on SSYS, which gave me a buy at $47.60, but by the end of the day it was only up 50 cents from that level, which was not much given that the day as a whole ended higher by about $5.50. One of the pros on TMO as compared to SSYS was that it did not have as extreme of a gap, and hence made it more likely that it would have a trend day.

As the market moved into the afternoon, the upside within the trading range slowed as compared to the selling. This led to a break lower into the middle of the afternoon, taking the indices right into their 30 minute 20 sma support levels and the previous lows on the 5 minute time frames. That support held when the downside momentum did not increase any more than the previous selling, despite it being stronger than the buying. When the market bounced off the support though, that momentum increased, pulling up around 14:00 ET and then busting through the previous higher into 14:30 ET. It created new highs on the day just before the last hour of the day, but after three waves of upside on the 1-2 minute time frames they turned back over and returned to the middle of the range going into the close. This meant a minor gain of 15.61 points in the Dow ($DJI), 6.57 points in the Nasdaq ($COMPX), and a small loss of 1.17 in the S&Ps ($SPX). Two of the top gainers that really helped out the Nasdaq were AMZN and AAPL which both posted strong earnings, while MMM and GM boosted the Dow.







The recent upside in the market is taking many of the indices into resistance on the monthly time frames. The S&P 500 is closing in on the highs from 2000 and the Dow is still in the resistance zone from 13,000. The Nasdaq is the only one of the three that really has a lot of upside potential without much for immediate resistance, although all three indices are likely to stall at the same time. As I mentioned though, any correction off highs in the next couple of weeks is going to have a difficult time turning over very quickly.

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.