The market’s break overnight above the past two MONTHS’ resistance ranging from 16-May’s 2405 high to 01-Mar’s 2401 high reinstates the secular uptrend and exposes a universe above current prices that is totally devoid of any technical levels of merit. In effect there is no resistance and ALL levels of technical merit now only exist BELOW THE MARKET in the form of former resistance-turned-support like the 2405-to-2400-area and prior corrective lows like yesterday’s midday corrective low at 2396 and 18-May’s 2344 next larger-degree corrective low. These 2396 and 2344 levels serve as our new short- and longer-term risk parameters the market is now required to sustain gains above to maintain a more immediate bullish count.
The only levels that exist above the market are those “derived” from past price action. And as we know, such levels as various “bands”, channel lines, the ever useless moving averages and even the vaunted Fibonacci relationships we cite often in our analysis never have proven to be reliable reasons to buck a clear and present trend without an accompanying momentum failure; and they never will.
Today’s recovery above our short-term risk parameter at 2405 nullifies the bearish divergence in short-term momentum stemming from 17-May’s failure below a 2375 minor corrective low discussed in that day’s Technical Blog. The trend is up on all scales with weakness below 2396 minimally required to even defer the bull and subsequent weakness below 2344 required to confirm a bearish divergence in WEEKLY momentum (below) and expose a correction that could be relatively significant in scope. In lieu of such weakness further and possibly accelerated gains are expected straight away.
Despite the past couple months’ technical, fundamental and headline gobbledygook, the secular bull market shown in the monthly log scale chart below didn’t even hiccup. At this juncture there is no objective technical reason to be anything but 100% long and bullish ahead of indeterminable and potentially extensive gains straight away.
In sum, longer-term traders remain advised to maintain a bullish policy with weakness below 2344 required to defer or threaten this call enough to warrant moving to the sidelines. Shorter-term traders whipsawed out of bullish exposure on the 17-May mo failure are advised to re-establish bullish exposure at 2405 OB with a failure below 2396 required to cover this position.