Posted on Apr 11, 2023, 08:29 by Dave Toth

Yesterday’s relapse below 03-Apr’s 75.60 low nullifies the bullish divergence in short-term momentum discussed in 04-Apr’s Technical Webcast and resurrects at least a correction of Mar’s rally from 72.55 to 78.11 and possibly the much larger-degree correction of Oct-Jan’s rally from 66.23 to 79.19.  As a direct result of this resumed intermediate-term weakness, the 240-min chart below shows smaller-degree corrective highs at 77.43 and 78.11 that this market now needs to recoup to expose and then confirm the sell-off attempt from 24-Mar’s 78.11 high as a 3-wave and thus corrective structure within a more immediate and potentially major bullish count.  Until and unless this market recoups these highs, the extent of the correction lower is arguably indeterminable and potentially more protracted.  Per such, 77.43 and 78.11 are considered our new mini and short-term parameters from which the risk of non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed by shorter-term traders with tighter risk profiles.

On a broader scale, the daily (*above) and weekly log (below) charts show the market’s position back in the middle-half bowels of the past quarter’s range that we believe is the B- or 2nd-Wave correction of Oct-Jan’s (A- or 1st-Wave) rally from 66.23 to 79.19 within a massive base/reversal process that could span quarters or even years.  These charts show 17-Jan’s 79.19 high still intact as the key longer-term bear risk parameter the market needs to recoup to conclude the correction’s end and major C- or 3rd-wave rally that, again, we believe may be major in scope.  Until this market recoups even the recent smaller-degree corrective highs and risk parameters cited above, let alone Jan’s 79.19 high, it remains debatable whether the current slide is “just” a correction of Mar’s 72.55 – 78.11 rally OR a continuation of the major B- or 2nd-Wave correction down from 79.19.  In the latter case, a more protracted assault on 08-Mar’s 72.55 low or even a break below this level would be expected.

These issues considered, a neutral-to-bearish policy remains advised for longer-term institutional players with a recovery above 79.19 required to negate this call and resurrect a major bullish count that would warrant a resumed long-term bullish policy and exposure.  Shorter-term term traders are advised to either maintain or renew a cautious bearish stance with a recovery above at least 77.43 required to threaten this call enough to warrant its cover.  In lieu of such strength, further lateral-to-lower, and possibly much lower levels are anticipated.

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