Yesterday and today’s break above Tue’s 3363 initial counter-trend high reinforces our bullish count introduced in Mon’s Technical Blog and leaves yesterday’s 3291 low in its wake as the latest smaller-degree corrective low the market is now minimally required to fail below to threaten this bullish call and allow for the tighter management of bull risk.  Such a sub-3291 failure would confirm a bearish divergence in short-term mo and stem this week’s recovery.  And given that this recovery has come within a smidge of the (3392) 50% retrace of Sep’s 3587 – 3198 decline, we would not be able to dismiss it as a (B- or 2nd-Wave) correction within a broader peak/reversal process.

Of course, commensurately larger-degree weakness below 24-Sep’s increasingly critical 3198 low remains required to negate our bullish count and resurrect a peak/reversal count that could be major in scope.  But for shorter-term traders with tighter risk profiles who want to play bull risk closer to the proverbial vest, yesterday’s 3291 low is an objective, market-define level around which to do so.  In lieu of such sub-3291 weakness, further and possibly accelerated gains are expected.

From a longer-term perspective, we remain with the challenge of identifying Sep’s sell-off attempt as another mere correction within the secular bull trend or the start of a more protracted correction or reversal lower. Thus far, this sell-off attempt stopped precisely where it needed to (just above 24-Jul’s 3191 corrective low) to maintain a broader bullish count, with this week’s recovery defining 24-Sep’s 3198 low as the suspected end or lower boundary to the correction. Sustained, trendy, impulsive behavior to the upside straight away would obviously reinforce this bullish count.

If the market relapses below 3198, there would be no way whatsoever to know how low “low” is.  So just like when this market failed below 31-Jan’s infamous 3212 corrective low and key risk parameter on 25-Feb before the bottom dropped out, even long-term players and investors are urged to neutralize all bullish exposure on such a sub-3198 failure to circumvent the depths and losses unknown of a larger-degree correction or major reversal lower. Until and unless such sub-3198 weakness is shown and especially after the past couple days’ continuation of this week’s recovery, further and possibly accelerated gains are expected.

These issues considered, a bullish policy and exposure remains advised with a failure below 3291 required for shorter-term traders to pare or neutralize exposure and commensurately larger-degree weakness below 3198 for longer-term players to follow suit. In lieu f such weakness, further and possibly accelerated gains are expected.

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