Yesterday's break below Oct'14's 3.18 low to the lowest levels since Sep 2009 reaffirms the secular bear trend from Aug'12's 8.49 all-time high and confirms the nearly 2-YEAR lateral recovery attempt from that 3.18 low to 17Jun16's 4.39 high as a 3-wave and thus corrective structure. This latest proof of weakness confirms 19-Aug's 3.44-1/4 high as our new long-term risk parameter this market is now MINIMALLY required to recoup to threaten a still-bearish count calling for further and possibly steep losses.
The weekly log scale active-continuation chart below shows understandably historically bearish sentiment levels typical of major BASE/reversal conditions. Traders are reminded however that sentiment is not an applicable technical tool in the absence of an accompanying confirmed bullish divergence in momentum needed to break the clear and present downtrend. Herein lies the importance of identifying 19-Aug's 3.45 high as THE specific and objective risk parameter the market needs to recoup to stem the slide and expose a base/reversal environment that could be major in scope. In lieu of such strength the trend is down on all scales and should not surprise by its continuance.
The hourly chart below shows the bear's resumption following a textbook 3-wave, 38.2%-retracement correction in mid-Aug that left 19-Aug's 3.44-1/4 high in its wake as a key corrective high and risk parameter to a long-term bearish policy. Strength above 23-Aug's 3.35 minor 1st-Wave low is required to jeopardize the impulsive integrity of a more immediate bearish count. In this regard 3.36 is considered our new short-term risk parameter for shorter-term traders with tighter risk profiles.
Minimally, we would expect at least an interim corrective hiccup and another round of new lows thereafter to satisfy a smaller-degree 5-wave Elliott sequence down from 3.44-1/4 and create the POTENTIAL for a bullish divergence in short-term mo. Now-former 3.22-to-3.30-range support would be expected to hold as new near-term resistance.
The monthly (above) and quarterly (below) log scale charts show the magnitude of the still-unfolding major bear market that just celebrated its 4-year anniversary earlier this month. Whether Sep'09's 3.02 low will "hold" is anybody's guess. What is NOT a guess is where this market has to trade to defer or threaten a continued bearish count: above 3.45.
Judging from the way the market bottomed between Jul 1998 and Apr 2002, we would not be surprised at all if it slips just past 3.02 before recovering. But until and unless this market confirms a bullish divergence in even short-term momentum on an intra-day hourly basis, further losses should hardly come as a surprise, including a break below 3.00.
In sum, a bearish policy and exposure remain advised with strength above at least 3.36 and preferably 3.45 required to threaten or negate this count to the point of paring or covering bearish exposure. In lieu of such strength further losses remain expected.