Good day! The market had a strong day on Wednesday. The indices continued the previous afternoon's rally very quickly, resting for a briefer time than usual before continuing, and hence displaying an increase in overall momentum. The move took the Dow to new highs almost right away. The rally continued throughout the first half of the morning into about 10:45 ET as both the Nasdaq Composite and S&P 500 made their way back to price resistance from the congestion at Monday's highs.

The morning rally in the indices created a second upside move in the new trend on the 15 minute charts. Even though the momentum was similar to the previous move, however, the S&Ps pushed past an equal move to hit Monday's highs, while the Nasdaq hit an equal move resistance almost exactly as compared to the rally the previous afternoon. At that point all three began to pull in, correcting very slowly off the highs as volume declined. The 10 period simple moving average had served as support on the previous correction into Tuesday's close and it served as support again into the 12:00 ET reversal period on Wednesday as well. The extreme move on the S&Ps, however, meant that a third move in the trend would most likely be a lot more gradual than the first two and had me expecting a reversal into the close.

The indices did hold well with the weakening upside bias, but the result was a lack of clear-cut setups. I didn't want to go long the indices as the afternoon progressed because I feared that the slower momentum would break with a much sharper downside move. When this move did trigger, it did so with just a trend line break after a false show of strength for just a few minutes into 14:30 ET. That pop kept the indices falling as quickly as they would have had the upside hugged the support just prior to breaking lower into 15:00 ET. Nevertheless, the move was steady into the 15 minute 20 sma, where it stalled for a few minutes before resuming slighty into the close.

The Dow Jones Ind. Ave. ($DJI) tacked on another 75.74 points, while the S&P 500 ($SPX) rose 9.62 points and the Nasdaq Composite ($COMPX) added 26.31 points. Top gainers were DD, VZ, AXP, GM, BSG, CVC, RIG, IVGN and CBG. Some popular names struggled though. These included IBM, AGN, HP, GOOG and CI.







Since the Dow broke so strongly to new highs, it doesn't really create that rounded highs scenario I was hoping for if a new high did hit, because it will tend to lead to a slower correction than the rally itself. The Nasdaq still has resistance at its own prior highs, but it also appears less likely that it will turn over to sell off more quickly than the upside. All three indices, however, look lower on the 60 minute charts into Thursday, but the correction can easily fall into an intraday range and will be less likely to trend as well as it did on Monday into mid-day Tuesday and then back off those lows.

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.