Posted on Nov 06, 2023, 06:56 by Dave Toth

Fri’s continuation of the past month’s recovery attempt to another new high at 130.76 leaves Thur’s 129.48 low in its wake as the latest smaller-degree corrective low this market would be expected to sustain gains above per a more immediate bullish count.  Its failure to do so would confirm a bearish divergence in very short-term momentum, threaten at least the portion of the recovery from 23-Oct’s 127.18 low and possibly render the entire month’s recovery a 3-wave and thus corrective event that might then re-expose the secular bear market.  Per such, we’re identifying 129.48 as our new mini parameter from which short-term traders with tighter risk profiles can objectively rebase and manage the risk of non-bearish decisions like short-covers and cautious bullish punts.

We will not be able to conclude the recovery from 04-Oct’s 126.62 low until/unless this market confirms commensurately larger-degree weakness below 23-Oct’s 127.18 corrective low.  However, it is interesting to note that Fri’s 130.76 high is also the exact 1.000 progression of 04-Oct-to-12-Oct’s initial (prospective a-Wave) counter-trend rally from 126.62 to 130.20 taken from 23-Oct’s 127.18 (prospective b-Wave) low.  Along with the 130-handle being a massive former support-turned-resistance area we’ll address below, traders are advised to beware even an admittedly short-term momentum failure as potentially squelching a 4-figure, 1-month rally as a correction ahead of a resumption of the secular bear trend.

Stepping back and while this market is coming off a bullish divergence in daily momentum last week that exposes at least the intermediate-term trend as up, the daily (above) and weekly (below) charts show the pertinence of the entire 130-handle-area as massive former support that, since broken in mid-Sep, now serves as a major new resistance candidate.  A short-term slip below 129.48 would be the first, smaller-degree indication that the market is acknowledging this fact and possibly re-exposing the secular bear trend.  To threaten the secular bear trend and longer-term bearish policy, a clear break above at least the 130-handle and preferably 01-Sep’s 133.34 larger-degree corrective high and key long-term bear risk parameter pertinent to longer-term institutional players remains required.

These issues considered, a bearish policy remains advised for long-term players with a close above the 130-handle required to pare exposure to more conservative levels and subsequent strength above 133.34 required to neutralize remaining exposure before reversing into a new bullish policy.  A neutral-to-cautiously-bullish stance remains OK for shorter-term traders with a failure below 129.48 threatening this call enough to warrant moving to at least a neutral/sideline position if not a cautiously bearish stance.

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