The Cloud Trader: Morning Update for Monday, May 5th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bearish
Overnight Inventory Change: Net short
Inside Day/Outside Day: Outside
Location of price relative to market profile: Below value area
Notable overnight futures markets changes:
Up:ZW (Wheat), ZO (Oats), GC (Gold), SI (Silver), CL(Crude Oil)
Down:TF (Russell Index)

News for the day:

ISM Non-Mfg Index: 10:00a

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention

Projected ES price action for the day: Many would argue that the relationship between the candlestick patterns and the volume, also known as volume spread analysis, is an important part of technical analysis. Based on the price location of the S&P near the triple top combined with the increase in volume after Friday's jobs report, the setup is forming a false breakout pattern. When this occurs, the professional traders look to trap long traders into the market after positive news only to subsequently sell the markets in the following days. We saw this happen when the markets opened on Friday and there has been continuation during the premarket with prices currently trading below Friday's range. If buyers step in at the open, then the natural inflection point would be Friday's low of 1872. If there is continued liquidation at the open, the next level of support is at 1865 but, after that, the chart is displaying room for a further selloff. Intraday edge is bearish.

Stock of the Day: American International Group, Inc. (AIG)- Earnings to be reported before the bell