Good morning! Market participants were looking for just about anything to grasp onto in Wednesday's session to produce some movement intraday. Unfortunately, until 14:00 ET they lacked anything to sway them one way or the other as we sit and await an increase in news from the next upcoming warnings and earnings season. We've seen a lot of smaller names and thinner stocks topping the market gainers and losers lists lately and its led to a reduction in intraday opportunities in stocks and has led to my favoring EMini trading in recent sessions. This is a nice benefit of having access to both marketplaces and not getting tied down to just one or the other. You can go where the most money is. When news is romped, the momentum players in the equities market can offer the best risk versus reward, but when things are slow on the news front, it's the indices themselves that I find most attractive.

A key difference in trading equities versus futures is that in the equities market I tend to scan for specific criteria, focusing on certain combinations to give me setups, but in the futures market you have to have a larger arsenal and even greater patience since there is no scanning to do in between trades. Instead you just have to wait out the current move and then have the patience to await the next trigger, even though it may take a bit of time to get one that lines up on multiple time frames since those have the highest odds for success. In a way though, you can be a bit more lazy since you don't have to worry about scanning and flipping through charts to find the next big mover. Instead you can just sit and keep half an eye on things as they develop as long as you don't get wrapped up in the minute by minute action and loose track of the bigger picture.

This being said though, I did had a more difficult time on Wednesday locating setups in the indices as well as the stocks. The market had gapped higher out of the open, which, given the overall market range, was on the bullish side. The market had opened directly under resistance, however, with the 15 minute 20 simple moving average directly overhead. This forced the indices into a trading range for the first 45 minutes of the day. As they did so the volume declined before breaking higher out of the range with the 10:15 ET reversal period. A rapid, albeit brief, rally followed which took the indices into price resistance from the previous session, but it lasted for less than 15 minutes before slowly turning over and giving way to an excessive amount of choppy trading throughout the remainder of the morning and into the first half of the afternoon.

After reversing off highs, the indices slowly worked their way lower until finally finding support when the Nasdaq gap closed at about 13:00 ET. At this point the 1 minute setups that had ruled the day finally lined up with the 15 minute charts to favor an upside move into the afternoon, however, the 14:00 Beige Book loomed on the horizon and continued to hold down most stocks. The indices themselves began to give an indication for their preference just before the release. The Nasdaq formed a 5 minute 2B pattern while the YM had perhaps the strongest pattern with a Phoenix between 13:17 and a trigger at 13:33 ET. This provided a great scalp with the clearest pattern of the afternoon up to that point. A second strong setup formed with a base from 13:39-13:57 ET. The setup then took off when the Fed release hit, moving quickly higher to break free from the congestion in play in the market up until that point on the day.

It was about this time that a number of individual stocks finally found a foothold, although most of the setups were rather sloppy and I still had a difficult time locating what I felt would end up being decent positions ahead of time. Even when I found stocks I liked, they didn't have clear-cut setups for the most part and required a good deal of faith and willingness to place some larger stops than usual to avoid a higher risk of getting flushed out due to the choppier trading.







Despite the risks from the type of trend move in play in the afternoon, the market still trended higher into the close. The Dow Jones Industrial Average ($DJI) had nearly a 200 point gain, adding 187.34 at the closing bell. Out of the Dow 30, 29 closed with solid gains, many rallying more than 2%, such as AA, BA, C, CAT, DD, GM, and INTC. The S&P 500 ($SPX) gained 22.67 points, while the Nasdaq Composite ($COMPX) rose 32.54 points on the day. The strongest sectors included real-estate investment trusts ($DJR), utilities ($UTY), and oil stocks ($XOI). Even though the momentum increased on the upside on Wednesday, the market can still go either way on Thursday since we're stuck in a daily trading range and we still likely to see more of the thinner stocks in the top momentum lists again.

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.