The market continues to exhibit signs of putting in a short term high as both of the charts below will illustrate. Short and Intermediate term swing traders should be flat at this point and upon a confirmation (Stochastics Cross) of a change in trend should look to begin their short selling operations.
Very much like the NASDAQ, the SPY is even more so showing signs of a rally that is very tired and in need of some consolidation. The tight range today, especially on a Monday is a precursor to a possible stretch of higher volatility and most likely to the downside.
Aggressive traders can look to purchase SPY Put options with the intention of a short holding period, therefore it will not be necessary to pay the extra premium for June puts, the May puts should serve our purpose just fine.
The possible decline that is on the horizon is also going to be very important for long term traders as well, as the nature of this market move is going to send a very clear message as to whether or not a new leg of the bear market is underway or if what we just completed on the upside is just the first up leg of two.