Overnight’s recovery above both our micro risk parameter at 11.20 and 21-May’s 11.32 high confirms our suspicions that late-May’s sell-off attempt was just another 3-wave and thus corrective event within a base/reversal count introduced in 30-Apr’s Technical Blog that we believe to be major in scope.  This resumed strength leaves last Thur’s 10.55 low and 12-May’s 10.05 low as the latest smaller- and larger-degree corrective lows the market is now required to fail below to threaten and then negate this bullish count.  Per such, these levels represent our new short- and long-term risk parameters from which a still-advised bullish policy and exposure can be objectively rebased and managed.

The daily (above) and weekly (below) log scale charts show the past SIX WEEKS’ basing behavior that now, minimally, requires a failure below last week’s 10.55 low to confirm a bearish divergence in daily momentum and threaten a broader bullish count.  Until and unless such weakness is proven, traders are reminded of the compelling and unique collection of technical facts that warn of a base/reversal count that we believe could be major in scope:

  • 01-May’s bullish divergence in momentum that, in fact, broke Feb-Apr’s downtrend
  • a textbook complete 5-wave Elliott sequence down from 12-Feb’s 15.90 high to 28-Apr’s 9.21 low
  • historically bearish sentiment/contrary opinion levels that, in the case of the Bullish Consensus, haven;t been seen since Sep’19 and, before that 2001!
  • the market’s gross failure to sustain Apr’s break below Aug’18’s pivotal 9.91 low, and
  • an “outside WEEK” the week of 28-Apr’s 9.21 low.

This is an extraordinary combination of technical facts that warns of a major base/reversal environment.  Thus far, the market has only retraced a Fibonacci minimum 38.2% of Feb-Apr’s major slide, so we cannot totally ignore the prospect that the recovery from 28-Apr’s 9.21 low is a bear market correction.  But until and unless this market fails below at least 10.55 and preferably 10.05 needed to flip the script, we urge traders to continue to bias WITH the clear and present uptrend that, again, could steep, even relentless gains straight away.

These issues considered, a full and aggressive bullish policy and exposure remain advised with a failure below 10.55 required for shorter-term traders to neutralize exposure and for longer-term players to pare exposure to more conservative levels.  In lieu of such weakness, further and possibly steep, accelerated gains straight away are expected.

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