Trend Up ... For Now
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In last weekend’s update, we wrote: "We are long now from 4030 ES. Over the last week, we have been trying to break through the supply zone above 4150 area.. and we have been getting selling from above there whenever we have tried to break through. We most likely will try again next week but I have my doubts on if we have enough strength to break through the 4180/90 area. If we can, then 4250/60 can come fast… but we may fall right back down once that is done. On the whole, I think we are close to a significant pullback.. but at the same time we do not have a clear sell signal yet. I will note though that with internals weakening, we are getting closer to a sell signal… We seem to be in that phase of the market advance where everyone is looking for a turn lower or a pullback… but the market just wants to continue grinding sideways.. churning… killing both shorts and longs until it is ready for the next move.. For us, no need to overthink things - Odds is still long… and so we continue to hold long until that changes."
What actually happened is the market broke through the supply zone at 4190/4200 on the Emini S&P 500 (ES), reached 4260, pulled back, and then closed the week at the highs.
Looking towards this week, price action is bullish short term, bullish medium term and bullish to neutral long term. We are long from 4030 ES.
Short- and medium-term internal indicators are on buys. Long-term ones have not moved to the buy side yet. The Odds Indicator remains on a buy signal with price and internal components staying on buys.
Sentiment, on the other hand, stayed on a sell with money managers becoming more bullish over the last week. On price, the trend is up for now, but I think we hit the 4300 area early in the coming week and then begin a pullback into 4250/40, maybe lower. And then we may try to break out over 4300 into the 4350/60 range.
On the whole, I think we are nearing some kind of bigger top over the next few weeks and the pullback/move lower we get from that top will tell us a lot on what next in the bigger picture. For now, the system/indicators supports the long side. I think this will change soon, but until that happens, we continue holding along the path of least resistance, which is higher for now.
Regarding pivots and zones to watch, grey zone resistance at 4291/4306 and then the 4350 area. Support is at 4262-44, 4200/4183 and then 4133-12.
For Monday, daily pivot is at 4257. Resistance R1 is at 4306 and R2 at 4332. Support S1 is at 4232 and S2 at 4183.
