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Posted on Jun 28, 2023, 08:34 by Dave Toth
Today’s break below last week’s 1919.5 low reaffirms our longer-term bearish count introduced in 17-May’s Technical Blog and leaves new smaller- and larger-degree corrective highs in its wake at 1949.0 and 2000.7, respectively. These levels now serve as our new short- and longer-term parameters from which the risk of a still advised bearish policy and exposure can be objectively rebased and managed.
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These new bear risk parameters may come in handy as the daily log chart above shows the market’s engagement of the (1911) 61.8% retrace of Feb-May’s rally from 1810.8 to 2085.4. But in the absence of an accompanying confirmed bullish divergence in momentum above a level like even 1949, no merely “derived” and so-called “technical level” will ever suffice as an objective reason to buck a clear and present downtrend.
From an Elliott Wave perspective, this month’s resumed slide is either the completing C-Wave of a broader bull market correction OR the dramatic 3rd-Wave of a more protracted move south. With still-frothy (79%) levels in our RJO Bullish Sentiment Index, traders are urged not to underestimate the extent of this market’s downside vulnerability as the forced capitulation of this long-&-wrong bullish exposure could exacerbate the plunge.
On a weekly basis below, the market as clearly rejected the upper-quarter resistance of the past 3-YEAR range in which a reversion to this range’s middle-half bowels well into an 1800-handle is easily seen.
In sum, the trend remains down on all practical scales and should not surprise by its continuance or acceleration straight away with a recovery above at least 1949 and/or 2000.7 required for traders to pare or neutralize bearish exposure commensurate with their personal risk profile. In lieu of such strength, further and possibly protracted losses straight away remain expected.
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