Weekend Trading Notes on April 6

It is funny how Cyprus and North Korea became smaller issues overnight. Slowing growth in U.S. is now squarely in the foreground of investors' worries. NFP served as a culmination of the latest economic reports which all pointed to some sort of pause in U.S. economy. Sequestration and payroll tax increase are being blamed. Obviously, nobody knows if this is just a blip or more weakness is ahead. One thing I am sure about - it is too early to call the end of this bull market. In bull market the price starts in the lower left and ends in the upper right of the intra-day chart. This is exactly what happened on Friday.

On ES there was a plethora of channels and a fib structure to trade (with all targets hit now). Support at mid-March low was held. Traders are going to establish new shorts on fib retracement of 1568 - 34 range. That is going to be a battle which shapes the next week or two of trading. OpEx week will probably bring the most volatility with 1500 ES target to shoot for. However, this is not my only view. I have an alternative which could take the price passed the all-time high, to 1580. I am not confused and not torn apart though, as there are clear signals which will precede those targets. There are two opposing head and shoulders patterns which are still forming. Stay tuned...

click on chart to enlarge