Bearish Internals, But A Spot From Which To Bounce

After a weak attempt at a bounce to start the week, the market sold off for most of the week to end very close to the lows.

As we enter this week, internals are bearish on all timeframes.  However, we are now at a spot where we usually see at least a bounce in price. Price action is short-term bearish, medium-term bearish and long-term bullish. 

Internals continued to deteriorate further last week. The NYHL1M positional is on a sell and the NYHL yearly went to a sell as well after being on a buy since 3000 on SPX.  These are not insignificant developments, and lend credence to the idea that we need more time building a base before we are ready to challenge all the highs again. 

So the most likely path I see this week is that we may have set a short-term bottom on Friday or will do so early this week.  And from this short-term low, we have a rebound rally into the 4620-50 area.  What the market does there will be key, but my thought right now is that we might form another temp top there and go for a lower low next.  From there we might have the building blocks for another leg in the bull market.  

Grey zone resistance at 4544–58, 4596-4605 and then at 4640–51. Support is at 4500-4492, 4447-34 and then at 4420–11.

For Monday, daily pivot is at 4544.  Resistance R1 is at 4596 and R2 at 4658.5. Support S1 is at 4481.5 and S2 at 4429.5.

All the best to your trading week ahead.

Princely Mathew hosts The Smart Money premium service at ElliottWaveTrader.