Posted on Dec 13, 2023, 07:09 by Dave Toth

This morning’s break above 01-dec’s 188.50 high reinforces our major base/reversal count introduced in 13-Oct’s Technical Blog and leaves new smaller- and larger-degree corrective lows in its wake at 175.05 and 165.25 that this market is now required to fail below to threaten and then negate this specific count and warrant defensive measures.  Per such, we’re defining these levels as our new short- and longer-term parameters from which the risk of still-advised bullish policies and exposure can be objectively rebased and managed by short- and longer-term traders, respectively.  In lieu of such weakness, the trend remains up on all practical scales and should not surprise by its continuance or acceleration straight away.

The daily (above) and weekly (below) log scale charts show the impressive reversal from 10-Oct’s 143.70 low that we believe is the correction of Feb’22 – Oct’23’s entire 5-wave decline from 260.45 to 143.70.  Given the magnitude of this 20-MONTH decline, this suspected correction could easily span months or even quarters more.  As the market is engaging the (193.46) 50% retracement of this 20-month decline as well as last Apr’s 204.90 major corrective high, we want to beware any bearish divergences in momentum that might temporarily cap this current but clear developing uptrend, especially since the expected rise in our RJO Bullish Sentiment Index shows the Managed Money community jumping on the bull band wagon.  Herein lies the importance of the corrective lows and risk parameters defined at 175.05 and 165.25.  Until/unless such weakness is shown however, there’s no way to know the prospective C- or 3rd-Wave up from 30-Oct’s 158.60 low isn’t “extending” to what would be sharply higher prices straight away.

These issues considered, a bullish policy and exposure remain advised with a failure below 175.05 required for shorter-term traders to take profits and move to the sidelines and for even longer-term commercial players to pare exposure to more conservative levels.  In lieu of such weakness, further and possibly steep, accelerated gains should not surprise.

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