Posted on Jan 10, 2024, 06:47 by Dave Toth
In 04-Jan’s Technical Webcast we discussed an area of expected resistance between 220.50 and 222.50 following last week’s continued decline. The hourly chart below shows Mon’s break to another round of new lows that leaves Fri’s 222.50 high in its wake as the latest and smallest degree corrective high this market is now minimally required to recoup to defer or threaten the major bear. Per such, for those shorter-term traders looking to really squeeze bear risk to its tiniest degree, we’re identifying 222.50 as our new mini parameter from which to do so. 02-Jan’s 224.50 corrective high remains intact as our short-term risk this market is still required to recoup to, in fact, confirm a bullish divergence in momentum of a scale sufficient to conclude the end of the downtrend from 06-Dec’s 234.75 larger-degree corrective high.
On a broader scale, it’s clear that commensurately larger-degree strength above 06-Dec’s 234.75 larger-degree corrective high remains required to confirm a bullish divergence in momentum of a scale sufficient to break the broader downtrend from 24-Jul’s 269.75 high, let alone threaten the secular bear market from May’22’s 437.50 high shown in the weekly log active-continuation chart below. This weekly chart shows the market at the extreme lower recesses of the past six months’ range where we always want to beware another intra-range rebound. And such a rebound may grow in likelihood IF/when this market can recoup AT LEAST 02-Jan’s 224.50 corrective high. But because May-Jul’s recovery attempt stalled at a Fibonacci minimum 38.2% retrace of Oct’22 – May’23’s 365.00 – 215.25 suspected 3rd-Wave that connotes underlying weakness, traders should hardly be surprised by a (5th-Wave) resumption of the secular bear market to new and potentially protracted losses below 215.00.
Lastly, the monthly log active-continuation chart below shows the magnitude of the secular bear market following Dec’22’s bearish divergence in monthly momentum and the market’s gross failure to sustain early-22’s major breakout above former 300-area all-time highs. the extent and (5-wave) impulsiveness of the decline from May’22’s 437.50 high characterizes the new secular bear market.
These issues considered, a bearish policy and exposure remain advised with a recovery above at least 222.50 and preferably 224.50 required for shorter-term traders to pare or neutralize exposure and for longer-term commercial players to pare exposure to more conservative levels. In lieu of such strength and especially following a break below 31May23’s 215.25 low, further and possibly protracted losses should not surprise.