Good day! The market has been in corrective mode, pulling back off the year's highs, since mid-February, but has spent much of that time in a trading range on the 6-minute charts after an initially strong drop. As I've written throughout the week, the bias within the range that has followed has been bearish and in favor of further downside out of the range to allow the market to correct for a similar period of time as last November.
The bears were initially hesitant within the range to take the lead, but the pace of the follow-through started to pick up on Wednesday. The evening price action in the index futures was comparable to that of Tuesday afterhours, but the pace was much stronger. This weakened the counter-correction off lows as the evening turned to morning and the slower pull higher in premarket trade on Thursday gave the bears yet another edge.
Dow Jones Industrial Average (Figure 1)
Although the economic data earlier in the week did not have much of an impact on intraday price action, this was not the case at all on Thursday. An unexpected jump first-time jobless claims this past week triggered the day's selloff. According to the Labor Department, claims rose 26,000 to a seasonally adjusted 397,000. The previous week's claims were also revised to the upside.
Meanwhile, the U.S. trade deficit widened by $6 billion to $46.3 billion. Analysts had been anticipating it to widen to a lesser degree to $41. 5 billion. The increase was attributed to greater imports of cars, capital goods, and oil.
S&P 500 (Figure 2)
The selling that took place afterhours on Wednesday and in premarket trade on Thursday was so strong that the market was facing exhaustion soon after the opening bell rang. When the 9:45 a.m. ET correction period hit the pace of the selling began to shift. The indices established slightly lower lows around 10:05 a.m. ET, cut held the zone of those lows throughout the remainder of the trading session, although the price action throughout the day remained weaker on the upside than the downside.