Posted on Mar 20, 2023, 09:19 by Dave Toth
On a shorter-term basis detailed in the 240-min chart below, Fri and overnight’s clear continuation of this month’s increasingly impressive rally leaves Thur’s 1911.5 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to stem this rally and expose a possible reversion to the middle-half bowels of its multi-year lateral range. Per such, this 1911.5 low is considered our new short-term but key risk parameter from which traders can objectively rebase and manage the risk of a still-advised bullish policy and exposure.
From a longer-term perspective however, the daily (above) and weekly (below) charts show the market’s recovery above 02-Feb’s pivotal 1975.2 high that confirms our suspicions introduced in 10-Mar’s Technical Webcast that Feb’s entire sell-off attempt from 1975.2 to 28-Feb’s 1810.8 low is a 3-wave and thus corrective affair within the major bull trend from Nov’s 1618.3 low. This resumed long-term strength identifies 28-Feb’s 1810.8 low as a larger-degree corrective low that makes it our new long-term risk parameter this market must now fail below to negate a long-term bullish count. Both our short-term risk parameter at 1911.5 and certainly this 1810.8 low will come in handy given the market’s engagement of the upper-quarter of the lateral range that has dominated this market for the past 31 MONTHS.
Indeed, if there’s a time and place for a market to arrest a rally and see it revert to the middle-half bowels of that range, it is here and now. And we will navigate this prospect precisely around levels like 1911.5 and especially 1810.8. If, conversely, this current rally is THE resumption of the secular bull market to new highs above Aug’20’s 2089 all-time high that warrants a continued bullish policy, we would expect the bull to BEHAVE LIKE ONE “up here” by sustaining trendy, impulsive price action higher. A relapse below 1911.5 would be the first indication that such a major bull is not for the moment.
On an even longer-term basis and as discussed often in this blog, the market’s gross failure to sustain Sep-Nov’22’s break below Mar’21’s 1673 low and the extent and impulsiveness of the past four months’ rally renders the entire 2020 – 2022 sell-off attempt a 3-wave structure as labeled in the monthly chart below. Left unaltered by a relapse below Nov’s 1618 low, this 3-wave sell-off attempt is considered a major (4th-wave) correction/consolidation ahead of an eventual (5th-wave) resumption of a secular bull market that dates from Dec 2015’s 1045 low to new all-time highs above 2089.
To be sure, the market remains BELOW the 2078-to-2089-area that has capped this market as resistance for the past 31 MONTHS. This area remains a considerable resistance candidate and is THE reason to beware a bearish divergence in momentum on even a smaller scale. But until and unless the market provides the price action necessary to threaten even the past couple weeks’ portion of the bull, further and possibly accelerated gains should not surprise.
These issues considered, a bullish policy remains advised with a failure below 1911.5 required to defer or threaten this call enough to warrant defensive measures. In lieu of such weakness, setback attempts are advised to first be approached as corrective buying opportunities ahead of further and possibly protracted gains.
Fri’s continuation of the current intra-range recovery above Wed’s 22.525 high reaffirms our bullish count introduced in 13-Mar’s Technical Webcast and leaves Thur’s 21.59 low in its wake as the latest smaller-degree corrective low the market must now sustain gains above to maintain a more immediate bullish count. Its failure to do so will confirm a bearish divergence in short-term momentum, break the uptrend and expose another intra-range setback of indeterminable scope. Per such, we’re defining 21.59 as our new short-term risk parameter from which traders can objectively rebase and manage the risk of a bullish policy and exposure.
the correlation between gold and silver is one of the more reliable correlations across the entire commodities spectrum, and indeed, they have both rallied smartly over the past week-and-a-half. But silver remains far from its 03-Jan high needed to resurrect its major uptrend from 01Sep22’s 17.40 low as the gold market has. And remaining deep, deep within the middle-half bowels of its 31-MONTH lateral range, the odds of aimless whipsaw risk are advised to approached as high, warranting a more conservative approach to directional risk assumption. Herein lies the importance of even a tighter bull risk parameter like Thur’s 21.59 smaller-degree corrective low.
These issues considered, a bullish policy and exposure remain advised with a failure below 21.59 deferring or threatening this call enough to warrant moving to a neutral/sideline position in order to circumvent the depths unknown of a steeper, if intra-range correction or reversal lower. In lieu of such weakness, further and possibly accelerated gains are anticipated.