Stock Indices Looking Toppy Ahead Of Non-farm Payrolls ReportOptions Xpressupdated May 04, 2012TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Friday, May 4, 2012 Prior to the jobs report, a look at the daily chart for the E-mini S&P 500 futures suggests that the price rally that started at the October 2011 low may be starting to lose some of its momentum. This could be potentially explosive should we see non-farm payrolls fall far short of expectations, similar to the March report. Some traders who are considering establishing a bearish position or hedging an existing long position may perhaps wish to explore the purchase of an out-of-the-money bear put spread in the E-mini futures options. For example, with the June futures trading at 1396.25 as of this writing, the June 1350 puts could be bought and the June 1275 puts sold for 9.75, or $487.50 per spread, not including commissions. The total investment in the spread would be the maximum potential risk on the trade which has a potential profit of $3,750 minus the premium paid, which would be realized at option expiration in June should the June futures be trading below 1275.00.Fundamentals Many U.S. equities traders have been biding their time during the past month, as fears of slowing growth in the U.S. economy has stalled the rebound in the stock indices. Among the biggest concerns has been a slowdown in employment growth, especially after the disappointing Non-Farm Payrolls report for March in which only 120,000 jobs were created. Adding to this fear has been the rise in jobless claims, which reached its highest levels in over 5 months. Coming into this morning's release of the April jobs report, analysts have seen a mixed bag of data. On the downside was the release of the private sector jobs report from ADP/Macroeconomic Advisers, which reported that only 119,000 jobs were added last month, which was well below analysts' estimates of 175,000 jobs being created. Of more concern with the ADP figures was that factory jobs declined last month. This would be the first decline in 7 months and, if true, would be contrary to previous economic reports. Not all the news was gloomy, as yesterday's Jobless Claims figures fell by a much larger than expected 27,000 to stand at 365,000. This was the largest 1-week decline in nearly a year, and helped put an end to the upward trend the past three weeks. Many traders are revising their forecasts for today's report, with the consensus estimate calling for 165,000 jobs created in April, with all the increase coming from the private sector. The public sector is expected to continue to shed jobs, with analysts looking for a decline of 5,000 jobs last month. Much has been made in the media of the decline in the unemployment rate the past few months, currently at 8.2%, with the debate centered on whether the decline in the rate is a sign of improving job prospects or a signal that potential workers are getting discouraged and leaving the job market entirely. Many traders are looking for the rate to remain unchanged, as are estimates for the average hours worked at 34.5. Given the relatively tight range the S&P futures have been trading within the past month, any "surprise" in the data could spark a breakout from its current range and potentially set the stage for the next major move in the market.Technical Notes Looking at the daily continuation chart for the E-mini S&P 500 futures, we notice prices moving sideways, trading on both sides of the 1400.00 price level. Prices are holding just above both the 20-day moving average and the uptrend line formed from the October 2011 low. Trading volume has been light the past two weeks, and the 14-day RSI has begun to weaken, with a bearish divergence forming. Major resistance is seen at the contract high of 1419.75, with support seen at the April 10th low of 1352.50. Mike Zarembski, Senior Commodity AnalystEditorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.