Today’s poke above the past couple weeks’ resistant highs reaffirms at least the intermediate-term uptrend with the important by-product being the market’s definition of Fri’s 108.50 low as the latest smaller-degree corrective low this market is now required to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will not only break this month’s uptrend/recovery attempt, but also contribute to a broader trading range/corrective environment that would warn of a resumption of Mar-May’s downtrend that preceded it.  Per such, Fri’s 108.50 low is considered our new short-term but key risk parameter around which directional biases and exposure are advised to be toggled.  Until and unless such sub-108.50 weakness is proven, further gains are expected.

The threats to a broader bullish count include:

• the 3-wave and thus corrective appearance, thus far at least, of the recovery attempt from 12-May’s 98.97 low close as labeled in the daily log close-only chart above
• the market’s encroachment on the (112.55) 61.8% retrace of Mar-May’s 121.92 – 98.87 decline
• the impulsive 5-wave appearance of Mar-May’s decline (which, theoretically at least, suggests only the initial A- or 1st-Wave down of an eventual and larger-degree correction or reversal lower)
• the return to a frothy 79% reading in our RJO Bullish Sentiment Index reflecting 54K Managed Money longs to just 14K shorts (which warns f downside vulnerability), and….

• the fact that this market has traded lower, and sometimes much lower, in the months following the Jun/Jul period in 13 of the past 14 years (shown in the monthly log chart below).

If the recovery from 12-May’s low is not a bear market correction, the only other count it could be is that Mar-May’s decline is a complete correction ahead of a resumption of the secular bull trend to eventual new highs above 123.65!  BUT IF this is the case, then it is imperative for such a bull to BEHAVE LIKE ONE by sustaining trendy, impulsive and increasingly obvious price action higher.  A failure below a level like 108.50 would be an initial threat to such a bullish count and initial short-term evidence consistent with our long-term bearish count.

These issues considered, a cautious bullish policy and exposure remain advised with a failure below 108.50 required to negate this call, warrant its immediate cover and reversal into a cautious bearish policy.  In lieu of such sub-108.50 weakness, further and possibly accelerated gains should not surprise with the recent and former 111.75-to-110.000-area resistance expected to hold as new near-term support.