By virtue of yesterday rebound, we’d like to draw traders’ attention to yesterday’s 19.01 low, the break below which would render it an initial (A- or 1st-Wave) low and confirm a currently threatening bearish divergence in momentum.  Given the extent of last week’s rally that left little in the way of battlegrounds below 19.01 shy of former 18.25-to-18.00-area resistance-turned-support, yesterday’s 19.01 low is the tightest yet objective parameter from which shorter-term traders can manage the risk of interim bullish exposure.

A failure below 19.01 would also be deemed more important stemming from the extreme upper recesses of the 20.29-to-17.39-range that has constrained this market for the past FIVE MONTHS, where it also remains conceivable that the recovery from 10-Jan’s 17.39 low or 03-Feb’s 17.48 low is just a corrective B- or 2nd-Wave within a massive peak/reversal process.  A failure below 19.01 will not necessarily negate a longer-term bullish count or confirm a resumed bearish one.  But it would question the risk/reward merits of maintaining a bullish policy “up here” enough to warrant paring or neutralizing bullish exposure.

From an even longer-term perspective, we would remind traders of the unique combination of major peak/reversal elements from Oct’21’s 20.29 high on a weekly log close-only basis below:

  • a confirmed bearish divergence in WEEKLY momentum amidst
  • what was historically frothy bullish sentiment and
  • a complete 5-wave Elliott sequence from Apr’20’s 9.81 low.

To negate this major peak/reversal count, the market needs to recoup last Oct’s 20.29 high.  Until and unless such long-term strength is resurrected, the past month’s recovery attempt cannot be ignored as a B- or 2nd-Wave correction within a peak/reversal process that could be major in scope.  These issues considered, a cautious bullish policy remains OK with a failure below 19.01 required to threaten this call enough to warrant moving to at least a neutral/sideline position.  Cautious bearish exposure on the immediate break below 19.01 would be OK with a recovery above Mon’s 19.89 high required to negate this call.

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