Good Morning, Traders. Another week has passed us and as the great sage, Roger Waters (of Pink Floyd fame) once said, "shorter of breath and one day closer to death." The same seems to be true of our beleaguered markets. Although in their case it would be shorter of breadth and one day closer to death. As we can see from the hourly below, we've been in a tail spin for the last seven trading sessions ever since we got within 100 points of the Dow's all-time high on May 10. Since then it has been nothing but down with a couple very weak rally attempts in between. Internally the situation has been bearish with very strong negative breadth readings and big swings in the advance decline lines, sometimes as negative as -2000 in the NYSE earlier in the week. There are downdrafts in marlets that are a normal part of being in confirmed uptrends, and then there are weeks like the past one. If you pull back to a larger timeframe than the hourly that is below, you can clearly see that the recent decline has now erased all of the gains since mid-April. More importantly, it has done so on the aforementioned negative internals. This type of action cannot be sustained for long periods of time and still expect the market to continue to make the higher highs and higher lows necessary to maintain an uptrend. So far we have not seen any meaningful countermove to the bearishness. If we do get some bounce, keep an eye on the hourly trendlines and blue circled areas above as possible resistance. At those points, I would be looking for short opportunities in weaker stocks and sectors. The Nasdaq Composite has already changed its near-term trend to downward and the S&P and Dow are in danger of doing so as well if a meaningful strong bounce does not come this week. If enough people decide to truly "sell in May and go away," then the odds of continued strength in these equities markets is truly low. Remember that there is a breaking point to everything and everyone, fundamentally, technically, and psychologically. This means that with more price action like the last seven sessions, or even slightly similar, bulls will start to turn into bears more and more. As for the near term, I actually find it quite difficult to get majorly short at this juncture. When the Dow loses 500+ points in just over a week of trading, it's time to either play long for a quick bounce, or do nothing and wait for the inevitable retracement to initiate short positions. Something to think about.

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.