Overnight’s break above the past week’s 4184-area resistance confirms last week’s sell-off attempt to 4110 as a 3-wave and thus corrective event we suspected it was, reinstating the secular bull trend.  This resumed strength defines last Tue’s 4110 low as the latest smaller-degree corrective low this market is now minimally required to fail below to confirm a bearish divergence in momentum, break the uptrend from 25-Mar’s 3843 larger-degree corrective low and expose a potentially more extensive correction of the portion of the secular bull from that 3843 low.  Per such, last week’s 4110 low serves as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a resumed bullish policy.

The potential for a bearish divergence in daily momentum is easy to see in the daily log scale chart above.  But even if the market confirmed this divergence with a failure below 4110, it would be of a grossly insufficient SCALE relative to the secular bull to expect anything more than an interim correction.  This said, the amount of green between 4110 and even former 3980-to-3960-area resistance-turned-support, let alone 25-Mart’s 3843 next larger-degree corrective low and key bull risk parameter, is nominally extensive.  This brings the technical and trading matter of SCALE into sharp focus.

Longer-term institutional players and investors remain required to maintain a bullish policy and exposure until and unless commensurately larger-degree weakness below 3843 is proven.  If risking your position to 3843 is considered too much, consider yourself a shorter-term trader with a tighter risk profile that would warrant paring or neutralizing exposure on a failure below 4110 that would circumvent the depths unknown of a correction below that point.

From a long-term perspective, the secular bull trend is well entrenched and expected to continue and perhaps accelerate with a failure below 3843 MINIMALLY required to threaten it.

These issues considered, a bullish policy and exposure remain advised for long-term players with a failure below 3843 required to threaten this view enough to warrant its cover.  Shorter-term traders whipsawed out of bullish exposure following 20-Apr’s bearish divergence in short-term momentum are advised to return to a bullish policy and exposure at-the-market (4183) with a failure below 4110 required to negate this specific call and warrant its cover.  In lieu of at least such sub-4110 weakness, further and possibly accelerated gains straight away are expected.

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