Good day! The market did a nice job of following through to new highs on the year on Thursday morning. This extended the move that had been in play since the prior session, however, and created exhaustion rather early on. The result was the longer correction we were watching for heading into the day. Even though the market fell into a trading range, the movement was not that choppy on the 5 and 15 minute charts throughout most of the session and the swing back and forth were fairly smooth. The range limited the number of strongly trending stocks on the day, but FCX, MA, JCG, AAPL, CIEN, WYNN and EQIX were among the exceptions.

The market began to first correct off the highs heading into the 9:45 ET reversal period. It took some rounding off though before the momentum turned around. The reversal found support at the 5 minute 20 simple moving average and the indices bounced a bit, but were never really able to shake the moving average and just slid higher before reversing again out of 11:00 ET. This returned the indices to the morning lows in the Nasdaq and slightly lower in the Dow and S&Ps to create a trap under the earlier lows. Although the indices again retraced quite a bit of the prior downside move and all of it in the case of the Nasdaq Composite, the momentum was much more gradual on the upside move out of 11:15 ET and into 12:30 ET as compared to the previous decline and the volume continued to drop off. Both of these pointed towards another wave of selling when the market failed to produce a bull flag into 13:00 ET and instead began to round off at the mid-day highs.

The strongest intraday move in the market took place out of the mid-day highs, gaining momentum with the 13:00 ET correction period. As with the other moves of the day, however, it didn't last long and found support at the lower intraday trend channel at 13:30 ET. It bounced a fourth time intraday at that point, returning the indices back to the upper end of the intraday trend channel for one last time ahead of the close. At this point the market did become more choppy and the move in the final hour of the day was a sloppy pullback from that upper end of the range. By the time the closing bell rang the market had failed to hold onto any decent gains and closed 5.44 points lower in the Dow ($DJI), 0.39 point higher in the S&P 500 ($SPX), and higher by 11.93 points in the Nasdaq ($COMPX), which maintained the best relative strength throughout the session.







On Friday the market is looking to hold up pretty well. There is still room on the 60 minute time frame to correct a bit longer from Thursday's morning highs. It could take one or two days to hit the 60 minute 20 sma and 20 day sma support, but the overall momentum and volume activity remains favorable for an upside breakout from the range. In order to change this bias I'd want to see some sort of rounding off on the 60 minute time frame, such as with an early breakout attempt for new highs on Friday at a slower pace than into Thursday morning.

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.