Micro Mo Failure Defines 2,214 S&P High, But Setback Approached as Another Correction | RJO Futures

December 2, 2016 2:16AM CST

The market's failure yesterday below 23-Nov's minor corrective low at 2192 confirms a bearish divergence in momentum that defines Wed's 2214 high as one of developing importance and a more reliable risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.  Against the backdrop of a SECULAR BULL MARKET we cannot emphasize enough how piddly this momentum failure is in terms of SCALE.  It is grossly insufficient to conclude anything more than a pittance of an interim corrective setback at this juncture.  Nonetheless, for anyone looking for an objective condition from which to perhaps take some profits and look to reset after a dip OR EVEN speculate on a more significant peak, the market has provided an objective condition to do so.  A recovery above 2214 will negate ANY bearish count, reinstate the secular bull and exposure further and possibly extensive gains.

To more accurately reflect a break of the uptrend from 04-Nov's 2079 orthodox low we believe a failure below 10-Nov's 2147 smaller-degree corrective low and short-term risk parameter remains required.

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On a broader daily log scale basis shown in the daily chart above, we are dismissing the overnight events of 09-Nov's presidential election as a "rogue" event with that night's 2028 low having no technical merit.  Rather, we contend that 04-Nov's 2079 low defines the orthodox low of the 3-wave bull market correction down from 23-Aug's 2192 high.  Per such, 2079 is considered our long-term risk parameter this market is MINIMALLY required to break to threaten the secular uptrend.

On a daily log scale close-only basis below, 04-Nov's 2081 low close and EXACT 50% retrace of Jun-Aug's 1982 - 2186 rally would seem to reinforce this count.  This close-only perspective also shows the market only now pulling back to 23-Aug's 2186 former all-time high close and former resistance that should not surprise now as a new support candidate for the current relapse attempt.

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Finally and from a very long-term perspective, traders are reminded of the magnitude of the secular bull market that was re-exposed in mid-Feb this year as introduced in 17Feb16's Technical Blog .  DESPITE EVERYTHING- confounding economists' guesses on a Fed tightening, questionable U.S. and global economic performance, Brexit, the insane U.S. presidential election campaigns, its eventual outcome, etc.- THE MARKET, the BEST LEADING INDICATOR ON THE PLANET , knew best and warned of the resumption of the secular bull to new all-time highs.  This secular uptrend remains clear and present and the DOMINANT technical factor.

There is no objective technical reason currently to believe this trend will do anything but continue, and it may ACCELERATE.  IF there is any kind of fundamental trouble on the horizon that will ultimately effect this rampaging bull, the market will be the very first to indicate such with a momentum failure below at least 2079 . Until and unless such sub-2079 weakness is evidenced, further, indeterminable and potentially extreme gains should hardly come as a surprise.

These issues considered, a bullish policy remains advised with weakness below at least 2147 and/or 2079 required to defer or threaten this call enough to take defensive action commensurate with one's personal risk profile.  In lieu of such weakness we believe the current micro setback to be another corrective buying opportunity ahead of resumed gains to further all-time highs with former 2186-area resistance considered new near-term support.  For scalpers, non-bullish decisions like long-covers and cautious bearish punts are OK with a recovery above Wed's 2214 high and micro risk parameter negating this call and reinstating the secular bull.

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