Hello Traders, Happy Cinco de Mayo. Over here in South Florida we celebrate it whether your Mexican or not. Everybody likes to go get drunk on this day around here. As for how the market is looking, looks like it is drunk itself. The market initially sold off from the highs after the Osama death and has been trailing down since. We got an initial bounce early a.m off the 100Ema on the 4 hour chart, however we continued to drift lower and sell at the downward trendline.We are still trying to hold this 100 Ema around the 1337.80 level. If this level fails to hold we have support at 1335 which is the top of that long consolidation range we were trading in before we broke down and then rallied higher. If we break 1335 you can expect us to sell down towards 1327 where we will be met with some minor support, but some decent support from the 200ema on the 4 hour chart. If we move higher off this 1337.80 area, then you can watch this downward trendline to see if we break above it. If we do that we should trade back towards 1350-1355 area. Notice how the head and shoulders pattern I highlighted in the previous video the other day is playing out. Now Like I said, usually these fail in bull markets and trap participants, but if this plays out then we got some downside action heading our way. I plan on selling my JPM Calls that I am slightly up in if it doesn't hold up well on the open, and then I plan on getting short weak stocks like the agg sector. My favorite play if we sale looks like it might be the MON May 65x puts that have a buy trigger if they get over this 1.55 area. Play it save and lets see what happens. Looking at the Daily /ES the 20Sma is at 1331 so we could tag that first also before any price action tries to hold. Play it by ear and just know those levels. GL
4hr /ES S&P 500 Chart
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