Today’s continued slide below 20-Aug’s 3344 corrective low and our short-term risk parameter confirms  bearish divergence in momentum that defines 02-Sep’s 3587 high as one of developing importance and today’s 3447 high as the latest smaller-degree corrective high the market would now be expected to sustain losses below if the market has a more protracted correction or reversal lower in store.  Per such, this 3447 level is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively base non-bullish decisions like long-covers and cautious bearish punts.  A recovery above 3447 will confirm a bullish divergence in short-term momentum, stem the slide and expose the sell-off attempt from last week’s 3587 high as a 3-wave and thus corrective affair consistent with the secular bull trend.

While the break below 3344 confirms a bearish divergence in daily momentum that identifies 02-Sep’s 3587 high as one of developing importance, the magnitude of the uptrend from 23-Mar’s 2174 low precludes us from concluding a larger-degree peak/reversal count.  Indeed, the market remains above a goodly amount of former resistance from the 3231-to-3284-area that, since broken over a month ago, serves as new near-term support.  Moreover, commensurately larger-degree proof of weakness below 24-Jul’s 3191 next larger-degree corrective low and key risk parameter remains required to conclude the end of the uptrend from even 29-Jun’s 2983 low, let alone the major uptrend from 23-Mar’s 2174 low.

This correction-vs-reversal debate is commonplace and goes to the matter of technical and trading SCALE and the risk parameters commensurate with one’s personal risk profile.  If you’re a shorter-term trader, today’s shorter-term mo failure is sufficient to neutralize bullish exposure, with a recovery above 3447 required to tilt the directional scales back to the bull side.  If you’re a longer-term player or investor, commensurately larger-degree evidence of weakness below 3191 remains required to threaten the bull enough to warrant defensive steps.

These issues considered, a bullish policy and exposure remain advised for longer-term players with a failure below 3191 required to negate this call and warrant its immediate cover ahead of what might be a more protracted correction or reversal lower.  Shorter-term traders have been advised to move to a neutral/sideline policy to circumvent the depths unknown of a steeper correction or reversal lower.  A recovery above 3447 will threaten this call, render the sell-off attempt from 3587 a 3-wave and thus corrective affair and re-expose the secular bull.