Looking For A Reset Ahead Of Next Move Higher

In last weekend's update, we noted:  "I think we consolidate for a bit again tomorrow before pushing above 5000.. but I am not expecting much more than that.. Internals look ugly compared to where price is.. and this is suggesting that whenever this move completes, we are going to get a bigger/deeper correction. Moves not supported by the broader market can quickly fall apart especially if some real volume comes in. I am looking for a top in the coming week and then a bigger pullback lasting for more than a few days.. How deep remains to be seen but it is time to be cautious over the next few weeks."

After a little bit of weakness to begin the week, the market continued to display strength and pushed higher to close the weak well above the 5000 area.  Internals continued to look lackluster and price seems to be carried on the back of fewer stocks as we go higher. Price is the ultimate arbiter, but internals matter too.  We are also in the window I have been looking at for a while as a possible topping area. In my view, the odds are that most of the easy move higher is done and the next bigger move is down, at least for a few weeks. This viewpoint increases in probability on a move below the 4990 support area.

On the upside, we are in a resistance area right now at this 5040/50 area, but if we clear it, then next resistance will come in the 5070/80 area.  Overall I am on the bearish side for the next few weeks, not looking for much but a decent-sized correction to reset price and internals, which will set up the next big move higher.

All the best to your trading week ahead.

Princely Mathew hosts The Smart Money premium service at ElliottWaveTrader.