Markets has continued the decline last week but over the last few days been consolidating sideways/up. To me it looks like some kind of bear flag as we could not break above key neckline 1366 – which is a major head and shoulders pattern with a target of 1290-1300.

For this coming week it should be very interesting ,, as I see a reversal setting up sometimes early this week, so hopefully the best would be for the markets to flush down further to 1290-1300 before the reversal and VIX breaking above neckline too with a target 27-30 area.

But all in all ,, if bulls are strong enough ,, they will push us above 1366 and then we might have a test of MA50 on daily chart.

All in all – I believe that we will start the week with some selling ,, but I think bulls will have a chance this week to push markets up. I dont expect a crash here in May — I think the coming crash will occur in June/July months and it should be a lot worse than what we saw in 2011 imo.

Long term charts continues to look very bearish imo – but for this week we might see a reversal to the upside – but the question is ,, if it will be from 1340 or 1290-1300.

So I’m going to hedge myself with XIV/TNA if we start to bounce/rally.

Conclusion:

I believe for this week we are going to see a great reversal ,,, my best guess is that we will start the week with a nice flush down – but after that ,, we might see a great rally setting up imo – so try to hedge yourself with some TNA/XIV in case we start to turn around. Markets is very oversold near term ,, but again could get more oversold of course. So far the level to watch is SPX 1366 ,, if we cant break this bears in 100% control and we might have a flush down to 1330 or even 1290-1300, but after one of those areas I expect a nice reversal to the upside. So I think bulls might have chances,, and ESPECIALLY into FACEBOOK IPO 18th May.