Internals Still Bearish, But Short-Term Buy Signal Setting Up

In last weekend's update we noted our primary trade was staying short (from Friday), and sure enough the grind higher triggered the bigger sell signal which took down the market to end the week at the lows.

For this coming week, options data is more or less on the bearish side. Internals are bearish. I have been writing for past couple of weeks how internals were not supporting the rise in price - usually when this happens, price quickly gets reset to the downside -- this is what we saw happen this past week. News is just an excuse -- always. Price action catches up with Internals -- just a matter of time. 

Price action is short term bearish, medium term bearish and long term bullish. Odds indicator continues to hold short. Micro1 and Micro2 are also on sell signals. We were short, covered that for 2.5% gains before the big bounce on Thursday -- which we then shorted again -- all with pretty decent timing. The second short is also up 2+% right now which we are currently holding. 

What next? The big short sell signal is still active and must be respected. However I am looking for a short term buy signal to set up in the coming week which will likely result in a bounce lasting a few days. Once the bounce runs its course, the big sell is likely to reassert itself which will most likely take the market to new lows near the 3500 area. But one step at a time. Right now, our indicators and systems are short - so we stay short until that actually changes. 

Princely Mathew hosts The Smart Money premium service at ElliottWaveTrader.