In last week’s updates we discussed the correction-vs-reversal threat stemming from 22-Feb’s bearish divergence in very short-term momentum.  Today’s recovery above the 3847-to-3856-area confirms a countering bullish divergence in short-term momentum that leaves Fri’s 3785 intra-day low in its wake as the end of at least the portion of the break from 25-Feb’s 3935 high.  And left unaltered by a relapse below 3785, the sell-off attempt from 16-Feb’s 3959 high looks to be only a 3-wave and thus corrective affair as labeled in the 240-min chart below, warning of a resumption of the secular bull trend that preceded it

25-Feb’s 3935 high remains intact as our short-term risk parameter the market still has to recoup to confirm the second-half of Feb’s setback as a 3-wave and thus corrective structure.  But as a result of this morning rebound, those who’d like to get an early leg up on such a resumed and broader bullish count have Fri’s 3785 low as an objective risk parameter from which to do so.

From a longer-term perspective and also as discussed last week, even the 2-week setback from 16-Feb’s 3959 high remains well within the bounds of a mere correction within the secular bull.  Commensurately larger-degree weakness below 01-Feb’s 3656 next larger-degree corrective low remains required to break even the portion of the uptrend from last Oct’s 3225 low, let alone threaten the secular bull market.  Per such, that 3656 low remains intact as our key long-term risk parameter for longer-term institutional players and investors.

These issues considered, a bullish policy and exposure remain advised for longer-term players with a relapse below 3656 required to negate this call and warrant its cover.  Shorter-term traders are OK to return to a bullish policy, but the market’s position in the middle of the past couple weeks’ 3959 – 3785-range presents poor risk/reward merits from which to do so.  Rather, we advise waiting for an intra-range setback to 3850 OB as a preferred buy-in condition with a failure below 3785 required to negate this specific call and warrant its cover.  Needless to say, a recovery above 3935 will reinforce this call, re-expose the bull and potentially steep gains thereafter.