Trading was a bit lighter throughout the day and a lot more range-bound. There were some nice setups, but the action was definitely a lot more mixed! By the end of the session the Dow Jones Industrial Average ($DJI) lost a mere 16.74 points (-0.1%) and ended at 13,291.7. The S&P 500 didn't want anyone to notice that it had actually traded on Wednesday. It closed only 0.07 point higher at 1,471.56. The Nasdaq Composite shed 5.4 points (-0.2%) and closed at 2,592.07.

There were not really a lot of stocks that managed to trend higher throughout Wednesday's session. The market gained ground throughout the morning and this is when most of the top gainers on the day had their strongest performance as well.

Some of those top names in the Nasdaq included Amgen Inc. (AMGN), which continued its rally from Tuesday; Wynn Resorts Ltd. (WYNN), which had also had a strong showing the day before; Google Inc. (GOOG); Synaptics Inc. (SYNA), which gave back a large chunk of its intraday gains in the afternoon, but still managed to close strong; Sohu Com Inc. (SOHU); and Lifecell Corp. (LIFC). In the NYSE the financial stocks, as well as the oil and energy stocks were the top leaders. Las Vegas Sands Corp. (LVS) also rose substantially for the second day in a row after breaking out of a nice daily range on Tuesday.

On the flip side, a number of names performed very poorly on Tuesday. One of the top NYSE losers was NYSE Euronext (NYX), which has been sliding lower all year and triggered a swingtrade short setup on Tuesday by breaking lower out of a multi-week base. The high-flying Aluminum Corp. (ACH) also had a tough break and gapped down sharply on the session. In the Nasdaq there were a lot of well-known names topping the losers category. These included the likes of Sandisk Corp. (SNDK), Nvidia Corp. (NVDA), First Solar Inc. (FSLR), Kla-Tencor Corp. (KLAC), Apollo Group Inc. (APOL) and Lam Research Corp. (LRCX). Most of these fell into trading ranges through the morning, but then broke lower over noon and continued lower throughout the remainder of the session.



In the markets themselves, while there was a great deal of choppy trading throughout the day, there was still a lot of order to the action as well. For instance, the market began with a bit of downside, but it was very mild selling which simply continued the correction from the previous afternoon. This downside was established with a slight gap and was followed by an almost immediate reversal and move back into the highs of the 15-minute range with the Nasdaq leading the way. It broke to new highs before 10:00 ET, but the S&Ps and Dow hit resistance at previous 5-minute highs and a pullback into 10:15 ET followed. Lighter volume on the very gradual correction off the intraday highs created a buy setup into 10:30 ET. This took all three indices to new intraday highs and past those of the previous session. A second pullback soon followed into 11:00 ET.

Since the second pullback on the 5-minute time frame had followed a somewhat slower upside move than the one out of the open, I had expected the third upside move of the day to be even more gradual. The move was a bit stronger, however, and the market was again able to hit the upper trend channel limits. This stronger move on the upside meant that while I'd been looking for a reversal and pullback into the afternoon, it would have a difficult time getting off to a strong start and would take longer to roll over. Nevertheless, the 11:00 upside move was still an exhaustion to the intraday trend. The market had hit resistance at previous highs on the 60-minute charts from last week and after three waves of buying, in which each correction between the waves is comparable, then the market needs to establish a longer correction and any additional continuation attempt is often very stunted.



The stunted continuation attempt on Wednesday came out of 12:00 ET when the market hit the 5-minute 20 sma support and the indices popped for a few minutes. Even though I thought they might form a 2T with a slightly higher high, they actually ended up holding those highs and the 5-minute 20 sma quickly gave way to some strong early afternoon selling. A continuation followed for a third wave of selling into 13:00 ET. This third move was a bit shorter than the second. Support held and the market turned back around with a pace change into 13:30 ET and another strong upside move which quickly took the market back to the morning highs.

Once again the market had a difficult time at the upper price resistance. The S&P 500 was the strongest and returned to the upper trend channel line, but the Dow had begun to round off at highs and the Nasdaq had given up its position as the relative strength leader. It only moved back into the resistance zone from the earlier congestion at highs and held under the absolute high. This reversed its leadership role and placed it in the spot of the index with the least relative strength. As I mentioned earlier, the afternoon is when most of the Nasdaq losers really began to move, so the fact that the overall Nasdaq had a more difficult time as well was not much of a surprise.



Since the upside in the afternoon was stronger-than-average, it did take the market a little bit of time to turn over and create some stronger afternoon selling. The market did this by hugging the 5-minute 20 sma with two waves of upside within the congestion and lighter volume along the support. The support gave way to a very strong late-day move to the lower end of the range in the Dow and S&Ps and through the previous 15-minute lows in the Nasdaq when the 15:00 ET reversal period hit. This second afternoon reversal off highs left the market relatively unchanged into the closing bell after being up nicely two times intraday.

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.