Good morning! The market had a pretty slow day on Wednesday. Gapping down into the NASDAQ Composite and SP500's 30 minute 20 sma support, the morning began with a choppy, narrow range as it corrected the premarket move. At first the pace was slow along the lows, forming a bearish pattern, but out of 10:30 ET the upside pace picked up and a breakout into 10:45 ET led to a closure of the gap in the SP500 and a move into the 15 minute 20 sma resistance in the NASDAQ.

Once again we saw a divergence between the indices as the NASDAQ had a much more difficult time moving higher mid-day. The SP500 and Dow Jones Ind. Ave. both made new intraday highs around 11:30 ET, but the NASDAQ hugged its 5 minute 20 sma to fall into a triangle as an Avalanche pattern on the 5 minute charts failed to materialize into the 12:00 ET reversal period. As the triangle broke higher, the SP500 and Dow also ran. The SP500 broke the prior highs, but the NASDAQ and Dow stalled as they put in equal move resistance right into the prior day's upper pivots.

The reaction off the 12:30 ET resistance was on the stronger side, meaning either a trading range such as a triangle or larger correction would occur in order to adjust to the change in pace. When the 5 minute 20 sma hit, the market began to hug that support level, forming an Avalanche pattern again as volume remained light into the 14:00 ET reversal period. This strong time zone in the market helped trigger the short setup that moved quickly initially, but rounded out at price support going into the 15:00 ET reversal period, changing the pace once more into the close. If the market had hit the support around 14:30 ET and then based into the 5 minute 20 sma, then further downside would have been most likely. This was my initial expectation. The slightly lower lows at a slower pace, however, made it very difficult, since that slow down in the selling opened the door for a pop once the selling began to correct.

For Thursday we are seeing the market stuck in the middle of a zone of indecision, which can be attested to by the light volume yesterday. The pace within the range is overall more gradual on the upside, but punctuated with both sharp peaks and valleys. Even though the 60 minute charts are more bullish when you look at the larger moves on those time frames, the fact that within each of the corrections we see sharper declines adds greater risk for false buy signals. Continue to use added caution.

Updates: VAR from last the 20th $38 around hit new highs the 27th at $40.70 before closing on the day with a base at highs ahead of earnings for swingtraders. For a larger position trade the weekly is still looking nice and I want the 20 week sma to hold as support. I still like NEW for an upside breakout on the daily charts and am watching HSP for a breakout on the daily and weekly charts. I expect that one to take a few more weeks to develop, however, since the 20 week sma is still catching up to the base. AEP and GP also have potential for upside breakouts on the daily charts at some point within the next week for swings.

Economic Reports and Events
Aug 04: Initial Claims 07/30 (8:30 am)
Aug 05: Average Workweek for Jul (8:30 am), Hourly Earnings for Jul (8:30 am), Nonfarm Payrolls for Jul (8:30 am), Unemployment Rate for Jul (8:30 am), Consumer Credit for Jun (3:00 pm)
Aug 08: -
Aug 09: Productivity-Prel for Q2 (8:30 am), Wholesale Inventories for Jun (10:00 am), FOMC policy announcement (2:15 pm)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stocks' earnings dates before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Aug 04: ACS (?), ALKS (A), AT (B), ANR (B), AMLN (?), ADSX (A), AILA (B), AIZ (B), ADBL (A), BEV (B), CMX (?), CHK (A), CLX (?), CMS (B), CSC (A), CNO (B), CEI (B), CMLS (B), DNR (B), DESC (A), DCEL (A), BOOM (B), EAS (A), FTO (B), GTW (A), GMST (B), GLG (B), GLBL (B), GFI (?), GT (A), GTI (B), HET (?), HIG (A), HNT (B), HUN (?), ICOS (A), IMAX (B), IDCC (B), KSE (B), KOSP (B), NKTR (A), NEW (B), ONXX (A), OPWV (?), PKD (B), PDC (B), PIXR (A), PDLI (A), PWR (B), QSFT (A), REV (B), RRD (B), SLE (B), ELOS (B), TSO (?), DTV (?), G (B), PMI (?), THE (B), TOT (02:00 am ET), TRN (B), TRZ (B), UVN (A), UNA (A), VRX (?), VCLK (4:00 pm ET), HLTH (A), WGR (B), OATS (B), WMB (B), WLDA (B)
Aug 05: CAH (?), CYT (A), L (B), NOV (B), PRCS (B)
Aug 08: AL (B), ACF (A), CNP (B), XEC (?), CRAY (4:00 pm ET), CVTX (A), DPH (B), DNDN (?), DYN (B), FLR (A), HMY (?), HRP (B), LAMR (B), NT (B), PTV (A), POM (?), PXP (?), SCLN (?), PKS (A), SONS (A), STKL (A), UPCS (A), VC (B)
Aug 09: APCS (A), AQNT (B), BBI (?), CVC (B), CE (B), CBB (B), CSCO (A), CCU (B), CDE (B), DISH (?), ESCT (A), EIX (?), EP (B), FLYI (?), GEMS (B), GKIS (B), IIP (A), KFX (?), KG (B), LGF (A), LOUD (?), MCIP (B), TMR (?), NRG (B), NTLI (02:00 am ET), PA (B), PNRA (A), RL (B), SIMG (B), MAY (?), PGR (B), TLCV (B), URI (?), DIS (A), XOMA (A)

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.