The extent and impulsiveness of yesterday’s break above 01-Jul’s 5.00 initial counter-trend high reaffirms our intra-range base/reversal count introduced in 01-Jul’s Technical Blog and leaves smaller- and larger-degree corrective lows in its wake at 487 and 4.71 that now serve as our new short- and longer-term risk parameters from which to base non=bearish decisions like short-covers and new bullish punts.  But while previous bearish exposure was advised to be neutralized on the recovery above 4.93-1/4, the expected (B- or 2nd-Wave) corrective relapse fell a few cents shy of the 4.85 level OB we recommended as a buying opportunity.  Per such and with former 5.00-area resistance considered new near-term support following yesterday’s breakout, traders are advised to first approach setback attempts to the 5.11-to-5.07-area as corrective buying opportunities with a failure below 4.87 required to negate this specific count and warrant its cover.

The daily chart above shows the past couple weeks’ impressive recovery that, while shy of 04-Jun’s 5.33 high, we believe breaks at least the downtrend from 31-Mar’s 5.70 high.  And with this year’s entire sell-off attempt from 22-Jan’s 5.93 high easily only a 3-wave structure thus far that’s hard to ignore as a corrective event, traders are urged not to underestimate this market’s upside potential.

Reinforcing the odds of a more protracted recovery are historically bearish sentiment/contrary opinion levels shown in the weekly log chart below.  COMBINED with the recent bullish divergence in momentum and wave elements, the extent to which the huddled masses have their necks sticking out on the bear side warns of a vulnerability to higher prices.

If there’s a cloud to this silver lining, it’s the fact that the market remains within the middle-half bowels of its massive, incessant lateral range where the odds of aimless whipsaw risk should also not be discounted.  Such range-center environs warrant a more conservative approach to risk assumption, and herein lies the importance of identifying tighter but objective risk parameters like 4.87. These issues considered, a cautious bullish policy remains advised with setback attempts to the 5.11-to-5.07-range advised to first be approached as a corrective buying opportunity with a failure below 4.87 required to negate this specific call and warrant its cover.  In lieu of weakness below at least 4.87 and preferably 4.71, we anticipate further and possibly protracted gains in the weeks and possibly months ahead.