Today’s impulsive break above 06-Aug’s 65.05 high and short-term risk parameter left in the wake of 07-Aug’s bearish divergence in short-term momentum reaffirms this year’s major reversal and leaves smaller- and larger-degree corrective lows in its wake at 64.01 and 62.01, respectively. These levels represent our new short- and long-term risk parameters from which a bullish policy can be objectively rebased and managed.
Former 64.90-area resistance would be expected to hold as new near-term support ahead of further and possibly accelerated gains.
The weekly log chart below shows today’s resumption of the impressive five month rally that exposes an area totally devoid of any technical levels of merit shy of 13-Jan’s 73.00 high. This doesn’t mean we’re forecasting a move to 73.00. But it certainly does mean that until and unless this market stems the clear and present uptrend with a momentum failure below corrective lows and risk parameters like we identified above, the market’s upside potential is indeterminable and potentially sever, including a run to and even through this year’s 73.00 high. The only levels that exist above 06-Aug’s 65.05 high are “derived” from previous data points, like Bollinger Bands, imokus, channel lines, the ever-useless moving averages and even the vaunted fib progression levels we cite often in our analysis. And in the absence of an accompanying confirmed bearish divergence in mo, every one of these derived levels have proven totally unreliable and useless. And they always will.
Our RJO Bullish Sentiment Index has posted a new multi-year high at 85% and cannot be ignored as a contributing factor to a peak/reversal threat, but traders are reminded that sentiment/contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed momentum failure, so the issue comes back directly and precisely to MOMENTUM, and the market’s ability now to sustain levels above at least 64.01 and especially 62.01.
These issues considered, a bullish policy and exposure remain advised for longer-term players with a failure below 62.01 required to negate this call and warrant its cover. Shorter-term traders whipsawed out of bullish exposure from 07-Aug’s bearish divergence in short-term mo are advised to return to a bullish policy and first approach setback attempts to 65.10 OB as corrective buying opportunities with a failure below 64.01 required to negate this specific call and warrant its cover. In lieu of at least such sub-64.01 weakness, further and possibly accelerated gains straight away are anticipated.