Today’s break below 09-May’s 150.49 low nullified the bullish divergence in short-term momentum discussed in 12-May’s Technical Webcast, chalks up mid-May’s recovery attempt as the correction we suspected it was against the backdrop of the secular bear market, and re-exposes the major downtrend. This resumed weakness leaves 12-May’s 155.33 high in its wake as the latest larger-degree corrective high and new key risk parameter from which longer-term institutional players can objectively rebase and manage the risk of a resumed or continued bearish policy.
From a shorter-term perspective, we’re identifying 18-May’s 151.89 low as the prospective and smaller-degree 1st-Wave of an eventual 5-wave sequence down from 12-May’s 155.33 high we’d now expect the market to sustain losses below to maintain a more immediate bearish count. A recovery above 151.89 won’t necessarily negate a broader bearish count, but it could provide an early warning that the decline from 155.33 is a B-Wave “irregular” of a correction from 09-May’s 150.49 low that is still ongoing and that would expose a potentially sharp C-Wave spike to around or above 12-May’s 155.33 high. Per such, we’re defining 151.89 as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can base resumed cautious bearish decisions.
The daily (above) and weekly (below) charts show today’s resumption of the secular bear market under waning downside momentum circumstances. Herein lies the rationale for trailing even longer-term bear risk assumption to 155.33. The trend is down on all scales and should not surprise by its continuance or acceleration. But on the heels of what we’ve identified as a dramatic 3rd-Wave down during Mar-May, we now have to approach each new lows as the possible completing 5th-Wave that, if/when confirmed by a bullish divergence in momentum, could expose a major correction or reversal higher. This market’s failure to now sustain losses below 155.33 would expose such a count.
These issues considered, a continued or resumed bearish policy and exposure are advised with a recovery above 151.89 required for shorter-term traders to move to neutral and commensurately larger-degree strength above 155.33 required for longer-term players to follow suit. In lieu of such strength, further and possibly accelerated losses straight away should not surprise.