Good day! Over the past month we've seen quite a bit of chop in the market as it's tried to keep pushing higher, but has had a more and more difficult time doing so. On Wednesday morning it tried once more, opening only a hair higher but then breaking upwards out of the 9:45 ET correction period. Despite the strength of this move, the overall market momentum that we had been following heading into the session remained weak. The indices simply had not corrected long enough off Tuesday highs to warrant another sustained rally. The market barely pushed through the previous highs before they began to turn back over around 10:10 ET.



The market flirted with a breakdown throughout the morning, going so far as to hug the lower trend channel line in the Nasdaq out of 12:00 ET on light volume. Unfortunately it just was not quite long enough of a correction off the highs at that point. The slightly lower lows in the S&Ps and Dow from the 11:15-12:15 zone created a rounding off that made it more likely for the market to try to pop into the afternoon before it would be able to turn over easily. I started to look for a 15 minute 2T in order to aid that reversal. It didn't quite make it to a new high in the S&Ps and Dow to form that double top pattern, but the Nasdaq did manage to make that added little trap pattern.



After an entire day of just chopping around without any strong bias and a lot of difficult trading due to lack of follow-through, the market finally broke down into 14:00 ET. The volume remained light at the beginning of the decline as the market hesitated to take in some real activity following so much indecision, but that changed as the indices pulled down into the 5 minute 200 simple moving averages as support, as well as the morning lows. The momentum continued to increased on a continuation pattern shortly after 14:00, leading to a retest of the previous day's lows. The exhaustion move held the support and the remainder of the day fell back into some sloppy trading, although the indices still managed to close right at the level of the intraday lows.



Wednesday ended with a loss of 14.30 points in the Dow Jones Industrial Average ($DJI), 1.85 points in the S&P 500 ($SPX), and 10.97 points in the Nasdaq Composite. ADI, GE, DE, AZO, QCOM, and BIDU were among those that were hit the hardest in Wednesday's session. There were still a few pockets of strength though. AL, MCO, TMX, FITB, LEND, AFFX and INSP were a couple of the top gainers. Although the market does have room and would do well to correct off these intraday lows heading into Thursday, overall the market is looking more bearish in the short term and likely to continue to see corrective action through greater choppiness and downside as we head into the three-day holiday weekend.

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.