Fri’s break above 11-Jun’s 1754.9 high and our short-term risk parameter discussed in 17-Jun’s Technical Blog not only nullifies last week’s bearish divergence in short-term momentum and resuscitates at least the intermediate-term uptrend, today’s continued strength above 18-May’s 1775.8 high renders the entire sell-off attempt from 14-Apr’s 1788.8 high to 05-Jun’s 1671.7 low a 3-wave affair as labeled in the daily log chart below. Left unaltered by a relapse below at least 21-Apr’s 1666.2 low and key long-term risk parameter, this clear 3-wave lateral price action is considered a corrective/consolidative event that warns of a resumption of the secular bull market that preceded it to new highs above 1789.
From a short-term perspective, Thur’s 1722.7 low is left in the wake of Fri and today’s rally as the latest smaller-degree corrective low the market is now minimally required to fail below to threaten a more immediate bullish count. Per such, this 1722.7 low serves as our new short-term risk parameter from which shorter-term traders can base non-bearish decisions like short-covers and cautious bullish punts. Former 1755-area resistance is considered new near-term support.
From a long-term perspective, it’s not hard to consider the secular bull trend as still intact with only a glance at the weekly chart above and monthly log chart below. Understandably historically frothy bullish sentiment and the market’s proximity to Sep’11’s 192 all-time high remain reasons to beware any bearish divergence in momentum of a scale sufficient to threaten the secular bull. But on this scale, that momentum failure level is at least 21-Apr’s 1666.2 corrective low and arguably 15-Mar’s 1450 low.
Favoring a still-bullish count is the obvious uptrend as well as the developing prospect that this month will produce another “outside MONTH” similar to Mar’s outside month (higher high, lower low and higher close than the previous month’s range and close). There are seven trading days before the month concludes however, so we’ve got to reserve judgement on Jun’s outside month. But what’s become clear however is the market’s mere lateral price action following Mar-Apr’s resumption of the secular bull that is hard to acknowledge as anything but consolidative within the still-unfolding secular bull market.
These issues considered, a bullish policy remains advised for long-term players with a failure below 1666.2 required to negate this call and warrant its cover. Shorter-term traders left to the mercy of aimless whipsaw risk typical of such lateral, rangey environments are advised to return to a cautious bullish policy and first approach setbacks attempts to 1755 OB as corrective buying opportunities with a failure below 1722.7 required to negate this specific count and warrant its cover. in lieu of weakness below at least 1722.7, further and possibly accelerated gains to new 9-year highs should not surprise.
