Overnight’s limit-offered move below 28-Feb’s 2853 intra-day low confirms the weakness and vulnerability discussed in Fri morning’s Technical Blog and leaves smaller- and larger-degree corrective highs in its wake at 2985 and 3137, respectively, the market is now required to recover above to threaten and then break the clear and present downtrend. In lieu of such strength, the trend is down on all scales and should not surprise by its continuance or acceleration. Per such, these levels serve as our new short- and longer-term risk parameters from which non-bullish decisions like long-covers and bearish punts can now be objectively rebased and managed.
Only a glance at the daily charts above and below (close-only) is needed to see that the trend remains down on all practical scales with former 2950-area support considered new near-term resistance. From an Elliott Wave perspective, the current portion of the decline from 03-Mar’s 3137 intra-day corrective high and 04-Mar’s 3111 high is either the completing C-Wave of a correction within the secular bull trend that could end at almost any time, including this week, OR the dramatic 3rd-Wave of a reversal lower that would warn of even more extensive losses than we’ve seen thus far over the past couple weeks. As the trend remains clearly down and will be down until threatened by a confirmed bullish divergence in momentum, unfortunately our directional bias remains with the bear.
The Bullish Consensus (marketvane.net) measure of market sentiment/contrary opinion is currently at 38%. This is the lowest since that that warned of and accompanied Mar 2009’s major base and reversal. Unfortunately, traders are reminded that sentiment/contrary opinion is not an applicable technical tool in the absence of a confirmed bullish divergence in momentum needed to, in fact, stem the downtrend. Herein lies the importance of the corrective highs and risk parameters specified above.
These issues considered, a bearish policy remains advised with a recovery above at least 2985 required to threaten this call and warn of a developing base/correction/recovery. In lieu of such 2985+ strength, further and possibly accelerated losses should not surprise.