Today’s continuation of the major bull trend leaves today’s 177.00 low in its wake as the latest smaller-degree corrective low the market is now minimally required to fail below to even defer, let alone threaten the major bull trend. But while this 177.00 threshold is extraordinarily tight relative to the mammoth rally that has unfolded the past couple weeks, we’re nonetheless considering this corrective low as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bullish policy and exposure.
Should the market fail below 177.00, such a failure would be of an insufficient scale to conclude anything more than an interim corrective dip within the major bull to at least one more round of new highs. But given the extent of the past week’s rally, even a relatively minor dip could be nominally extensive. And with the market’s correction OR reversal downside potential below 177.00 being of indeterminable scope, we advise erring on the side of a more conservative approach to risk assumption “up here” and exchange whipsaw risk for greater nominal risk.
Indeed, only a glance at the daily chart above is needed to see that the rally has ACCELERATED over the past couple weeks, warning that the 5th-Wave or even possible 3rd-Wave rally from 16-Feb’s 174.08 low and key long-term risk parameter is “extending”. With the extent and impulsiveness of the rally from Nov’s 169.12 low warning that this rally is the completing 5th-Wave of a massive sequence from Mar’18’s 156.22 low that could have its sights set on Sep’19’s 179.67 high, there’s still room for the bull to run. But as it’s encroaching on that historic high, we must also watch for a slowdown in the RATE of ascent as an early warning of a developing peak/reversal threat. An admittedly micro mo failure below 177.00 would/could be the start of that slowdown process.
These issues considered, a bullish policy and exposure remain advised with a failure below 177.00 required to defer this call enough for shorter-term traders to move to the sidelines and for even longer-term players to pare exposure to more conservative levels. In lieu of weakness below at least 177.0, the trend remains up on all scales and should not surprise by its continuance.