The past couple days’ break below 10-Mar’s 325.7 low reaffirms the developing downtrend and leaves 16-Mar’s 331.3 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to threaten the clear and present downtrend.  In this regard 331.3 is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can effectively rebase and manage the risk of a still-advised bearish policy.  Former 326-area support serves as our new short-term resistance candidate.

The market’s clear break below the general 330-area we cited as a key support candidate throughout Feb exposes Sep-Jan’s entire 299.7 – 354.8 recovery attempt as a 3-wave and thus corrective affair that warns of a resumption of Jun-Sep’16’s collapse that preceded it.  A decline of similar scope (i.e. 1.000 progression) to last year’s relapse would project to around the 292-area on a weekly log close-only basis below.  Until the market breaks Feb’16’s MAJOR low however, all of the price action down from Jun’16’s high remains in keeping with our preferred major BASE/reversal-threat count.

On a weekly log scale active-continuation chart basis below the market remains deep within the middle-half bowels of the past 2-1/2-YEAR lateral, choppy range that we believe could be the same type of major base/reversal environment that stemmed from the Dec’08 and Nov’04 lows circled in blue in the monthly log chart below.  To negate this very long-term bullish count all the market has to do is break Feb’16’s major 258.9 low and secular risk parameter.

IF we are totally wrong on this multi-year base/reversal process, then somewhere along the line the resumed secular bear trend needs to behave like one and drive prices lower in a trendy, impulsive, leave-no-doubt manner.  Perhaps the past couple months’ slide IS this trend.  Should this decline- that we fully expect to be accompanied by increasingly bearish fundamental headline fodder– be stemmed by a bullish divergence in momentum ABOVE Feb’16’s 258 major low (perhaps around that 292-area Fib progression area cited above), then we would consider such “non-weakness” as another contributing factor to our long-term base/reversal count and look to act accordingly.  In sum and for the time being however the trend is down and expected to continue and even accelerate in an increasingly obvious way to challenge or even break last Sep’s low.  Strength above at least 331.3 is required to threaten this call and warrant a move to the sidelines by shorter-term traders and reduced bearish exposure by longer-term players.