Disappointing Action By The Bulls

In our update last weekend, we noted that "4190/4210 area is resistance... so we can begin the pullback from that area." What actually happened is we hit 4200 resistance on the Emini S&P 500 (ES), pulled back, and are trying to take support in the 4100/4080 area.  

Price action is bearish short term, neutral to bullish medium term and neutral long term.  After some strength to start off the week, the market pulled back consolidating the gains from the previous week.  Looking at price by itself on a weekly basis, there is nothing terribly wrong -- consolidating sideways after a big week -- but the complete giveback of the Thursday rally on Friday is disappointing action by the bulls.

So I think caution here is warranted.  We can hold around here and attempt another higher toward 4200 area, but price seems to be getting rejected above 4150 closer to 4200 and getting sold off to test support at 4100/4080 repeatedly. 

Below this support we have the 4040 area, which is important.  Losing that will mean a test of the lows again near 3900 area and below. 

Looking at the daily, I can see a wedge forming and this is not a good picture for the bulls because it would also mean a retest of the lows once the 4050/40 area is broken.  SO… a lot of mixed signals from the market over the last week.  I want to be bullish, but price is not exactly showing much strength after the one week wonder on low volume.  The next few days are going to be key and should set the trend for the rest of the month..  

As for zones and pivots, grey zone resistance at 4137-52 and then 4188/4210. Support is at 4098/4071 and then 4039-25.

For Monday, daily pivot is at 4132.  Resistance R1 is at 4167 and R2 at 4224. Support S1 is at 4074.5 and S2 at 4039.5.

All the best to your trading week ahead.

Princely Mathew hosts The Smart Money premium service at ElliottWaveTrader.