The market was substantially stronger on Wednesday than I had been expecting heading into the session. While the volume had been light on Tuesday, suggesting that the market would have a difficult time breaking the previous lows, I was still looking for things to remain weaker ahead of the holiday weekend. Once the session began, however, very little weakness manifested itself.



The indices opened higher to begin the day and then fell into a slow decline with the 5-minute 20 sma serving as support before breaking higher out of 10:15 ET. The buying began slowly, but picked up a great deal into 11:00 ET when the first resistance since the open hit at the same time as the reversal period. This resistance was based upon the mid-day congestion from Tuesday. It was the lower end of the congestion in the Dow Jones Ind. Ave. and S&P 500 and the upper end of it in the Nasdaq Composite. A slower continuation took the Dow and S&Ps to the upper end of it just before noon.



The slowdown in the buying into noon created the only real bearish activity of the day. The market rounded off a bit and corrected off these highs into the early afternoon, falling slowly into the 15-minute 20 simple moving average support. The indices then began to hug the upper end of the descent from about 13:45-14:00 ET, and when the 14:00 ET reversal period hit, the bulls returned with greater conviction than seen throughout the morning's upside. Each of the waves of buying was brief, but 15-20 minute bases consistently led to breaks to new intraday highs throughout the afternoon and into the close.



By the end of the session all three of the major indices had closed the gap zone from the previous session. The Nasdaq closed the gap completely, while the Dow and S&Ps were very close. The Dow ($DJI) added 247.44 points on Wednesday (+1.9%). Top gainers included General Motors (GM) (+4.8%), Intel (INTC) (+4.7%), and Home Depot (HD) (+4.3%). The S&P 500 rose 31.40 points (+2.2%). The Nasdaq had the largest percentage gains of 2.5% (+62.52 points).

Among the top performers on Wednesday was Apple Inc. (AAPL) (+5.7%) after it raised Q1 earnings and revenue forecasts. Nokia Corp. (NOK) rallied with the launch of an iPhone and BlackBerry rival product. Compuware Corp. (CPWR) and Medicis Pharmaceutical Corp. (MRX) rose on buyback news. Additionally, Big Lots Inc. (BIG), Dycom Industries Inc. (DY), Dollar Tree Stores Inc. (DLTR), and Williams-Sonoma Inc. (WSM) leapt higher on earnings. On the downside, top losers were PDL BioPharma Inc. (PDLI) and The9 Limited (NCTY).

These light volume back and forth moves leave me with very little bias heading into Thursday since they are indicative of a trading range. As of now, the range is not favoring one end over the other, so I don't have a lot to go on to suggest what direction it will ultimately break. Instead it seems wise to mainly focus on daytrades the remainder of the week and watch the market intraday for the momentum plays.

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.