The market was pretty choppy throughout the entire day on Wednesday. The session began with a larger-than-average downside gap which opened at Tuesday's lows in the Nasdaq Composite ($COMPX) and under those lows in the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX). By the end of the day the indices had not moved far from those levels. The Dow lost 53.33 points, while the S&P 500 fell 3.2 points and the Nasdaq Composite shed 12.80 points. This was well off the worst levels of the day, however, when the Dow was down more than 140 points.



After the weak open the market attempted to pull higher initially, but the S&P 500 only managed to come within a few ticks of the previous day's close before turning over and making its way back to the intraday lows. I found very few setups in individual stocks that caught my eye early on, but found the indices themselves very methodical and easy to trade throughout the entire morning. There were a number of very nice pivots or reversals on the 1-5 minute time frame with strong follow through for those time frames no matter which direction the market was heading.



The momentum throughout the morning began to favor a bearish bias early on by pulling up more gradually from the lows of 10:15 ET on declining volume. Just before they hit the 5 minute 20 period simple moving average, the market stalled and broke to new intraday lows. Even though the Nasdaq was hit hard by Yahoo (YHOO) when they cut their earnings outlook for the year, the Nasdaq still tried to hold onto its recent daily gains.



Wednesday's gap and continued intraday weakness confirmed the rounded highs we have been following in the last couple of sessions and it allowed for an increase in the selling pressure. That pressure slowed when the market flushed out into price support from several days back. The momentum on the 15 minute decline was a sloppy one and not above average. When that downtrend channel broke around 12:45 ET, then the bulls began to raise their heads out of the sand again for a bit. Even though there was another decent correction off highs when the indices hit the 15 minute 20 sma, the pace increased sharply when the 15 minute 20 sma broke. This is confirming a larger trading range on the daily and 120 minute time frames. The range has room to continue into Thursday, but the larger daily time frame still appears to have more room to play around with at the highs.

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.