Posted on Feb 17, 2023, 07:31 by Dave Toth

In Mon’s Technical Blog we identified 08-Feb’s 2.657 high as a very, very tight corrective high we required the market to recover above to even defer, let alone threaten the past six months’ total meltdown.  By virtue of overnight’s break below the past couple weeks’ lows and support around the 2.34/2.35-area, the market has reaffirmed 08-Feb’s 2.657 high as the upper boundary of a (suspected 4th-Wave) correction and the minimum level this market is required to recoup to confirm a bullish divergence in daily momentum and expose an intermediate-to-longer-term corrective rebound.  Per such, we’re reiterating this 2.657 level as our short-term but key parameter from which both short- and longer-term traders can objectively rebase and manage the risk of a still0-advised bearish policy.

It is acknowledged that, given the magnitude of Dec-Feb’s (suspected 3rd-Wave) portion of the major bear, a bullish divergence in daily momentum above such a tight risk parameter such as 2.657 will NOT be of a sufficient scale to conclude the END of the six-month, 77% collapse from last Aug’s 10.028 high.  But BEACSUE of the magnitude of this meltdown, and especially given the market’s return to the lower-quarter of its historical range amidst an understandable return to historically bearish sentiment levels, even a relative minor (4th-Wave) corrective rebound could be nominally steep.  Until and unless the market recoups 2.657 however, the trend remains down on all scales and should not surprise by its continuance.

These issues considered, a bearish policy and exposure remain advised with a recovery above 2.657 required for both short- and long-term traders to take profits and move to a neutral/sideline position or even a cautious, interim bullish stance with a relapse below whatever low is rejected/defined by such a 2.657+ divergence then required to negate the bullish punt.  In lieu of such 2.657+ strength, further losses remain expected.