It was a mixed session for the market on Tuesday. While I managed to find some great setups in individual stocks such as Dicks Sporting Goods Inc. (DKS), the overall market had a tough time making any headway. Even though the market had some core setups in terms of the 5 and 15 minute time frames as you can see on the charts shown below, the main problem was that in forming and following through on the setups there was a great deal of chop and overlap from bar to bar. This would have made it easier for many to time entries and exit incorrectly and get flushed out on minor moves before the larger target levels hit. Although I saw some nice setups in the afternoon that would have worked out quite well, I ended up staying away from them for this very reason. I have not yet decided if that was a good or bad choice on my part since this time it obviously cost me a lot!



The day began on Tuesday with a bit of downside as the market continued to correct off Monday afternoon highs. The back and forth action created a bull flag and trading range on the 15 minute time frame in the indices with the 15 minute 20 simple moving average serving as support. The pace turned over within the range with a base along highs from about 10:45-11:15 ET. The range broke upwards out of that final morning correction period and within a few minutes the Dow, Nasdaq and S&Ps were all at new intraday highs and following through with my expectations for upside on the day, although only the Nasdaq really mirrored my expectations.

The rally continued throughout the remainder of the morning and into the early afternoon with a final push out of the 12:00 ET correction period. This time the momentum was slower, and while the Nasdaq was free and clear of intraday resistance, it did have the 10 and 100 day simple moving averages to deal with. The Dow had even stronger resistance intraday. It had ran smack into the previous afternoon's highs and held them perfectly. The slowing momentum on this last push higher in the Dow and S&Ps allowed the market to pivot sharply off the resistance into 12:30 ET. The Nasdaq fell back to its 5 minute 20 sma, but the Dow and S&P 500 both plunged back into the morning congestion where they finally found support.



Throughout the first half of the afternoon following the market's initial decline, the indices fell into a narrow trading range as volume dropped to one of its lowest levels in a number of weeks. The upside momentum was very slow and at 14:00 ET the support began to break. Keeping in line with its choppier trading activity, however, it took a bit more time before the selling began to increase.

As the market descended there was a still a lot of overlap from one bar to the next until the indices hit equal move support as well as price as moving average support around 14:45 ET. This was where previous lows intraday hit, as well as the 15 minute 20 sma in the Nasdaq. In the Dow and S&P 500 the 5 minute 200 sma was tested at this time and in the Dow this also corresponded to the 15 minute 200 sma. The pivot off this merger of support levels was one of those "Duh, Toni, you should have traded it" setups where I had the order up and ready, but didn't push the button. It triggered at the same time as the 15:00 ET correction period as well and the market made its way back into its earlier afternoon congestion before stalling a bit again into the closing bell.



By the end of the day the Dow Jones Industrial Average ($DJI) lost 31.49 points. Among the weakest stocks were United Technologies Corp. (UTX), which fell 2.4%), and Exxon Mobil Corp. (XOM), which lost 1.6%. Top gainers were Home Depot Inc. (HD) and Verizon Communications Inc. (VZ). In the other indices, the S&P 500 ($SPX) gained 1.57 points, while the Nasdaq Composite ($COMPX) led with a gain of 12.71 points, or +0.5%. Broker dealers, financials, and airlines were leading sectors on the day, while oil and gold struggled.

My bias heading into Wednesday could be labeled "cautiously bullish." I do still feel there is room to continue to rebound this week and I am most comfortable given the current daily dynamics to take positions in that direction. I am aware, however, that the bullish sentiment is paper thin and it would not take a lot to create another panic move intraday, even though I think that we are probably going to see a much longer correction off recent lows over the next couple of weeks. Whether this ends up being a decent correction in terms of price or remains a choppy, range-bound type of correction is yet to be seen since both scenarios have approximately equal weight at this point.

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.