Market Weak. Will it Continue Down?

With some relative strength in the US dollar yesterday, the markets sold off a bit. We saw new highs in silver and gold early yesterday morning and as the markets followed suit (ES made a 1 tick higher high) it looked like a buying opportunity to many traders. Seeing that, combined with understanding the high likelihood that overhead resistance would hold in the 1224-1226 range, it was a great opportunity to sell with confidence. View my comments here to see how I traded it.

The negativity was confirmed with a close below 1212.50 on the ES yesterday. That remains a critical level this morning. The market needs to see some momentum back above 1212-1213 before any confidence can come back. On a positive note, new jobless claims came in lower than expectations, so we'll see if the market can build any continued buying momentum into the open on the heels of that.

But inevitably, we are heading down below 1200, but before we do, the ES will have to trade through yesterday's lows, which also happen to coincide with the April highs (at 1207.50). So, we'll see if today turns out to be a consolidation day and which way we break out, either above 1213 or below 1206.

Another note-worthy event is the 30 year bond auction today at 1:00pm EST. We'll see if buyers demand higher yields of this longer term debt as a result of the Treasury's $600 Billion dollar fun at the printing presses. I will watch to see how the dollar responds. If the dollar continues its momentum we will likely break down further.

Levels to Watch this morning (ES):

Resistance above at 1213, 1215-1216, 1218-1219.
I like shorting the up-ticks off any of these levels today.

Support below at 1206-1207, 1199-1200, 1197-1198, 1193-1194
I am a buyer in the mid 1190s