Posted on 11/8/2021 5:58:16 AM by Dave Toth
In 18-Oct’s Technical Blog following that day’s bearish divergence in daily momentum amidst historically frothy bullish sentiment levels, we warned of the developing threat of a broader peak/reversal environment. While 11-Oct’s 20.61 high left in the wake of that mo failure remains intact as resistance the market needs to recoup to reinstate the secular bull market, Fri’s break above 27-Oct’s 19.86 high and overnight’s subsequent gains confirm at least the intermediate-term trend as up and leave smaller- and larger-degree corrective lows in its wake at 19.19 and 18.82 that this market is now required to relapse below to resurrect a broader peak/reversal threat. Until such weakness is proven and given the backdrop of the still-arguable secular bull trend, we believe the market as weathered another bull market correction and is positioning itself for a resumption of the major bull trend.
Per such, we’re defining 19-Oct’s 18.82 low as our new long-term bull risk parameter to which longer-term traders can objectively rebase and manage the risk of a still-advised bullish policy and 01-Nov’s 19.19 low as our new shorter-term risk parameter from which shorter-term traders can re-establish a bullish stance after getting whipsawed out of exposure following 18-Oct’s momentum failure.
The daily chart above shows the past couple days’ resumption of the mid-to-late-Oct rebound as well as a preponderance of resistance from the mid-20-handle-area that dates back nearly three months. On an even broader scale, the weekly log chart below shows still-frothy bullish sentiment, waning upside momentum and a possibly complete and major 5-wave Elliott count. It’s not hard to find technical factors that still warn of a broader peak/reversal-threat environment. But herein lies the importance of the market’s definition of recent smaller- and larger-degree corrective lows at 19.19 and 18.82. If Oct’s sell-off attempt completed or defined the lower boundary of another major bull market correction, then the bull should now be expected to BEHAVE LIKE ONE with sustained, trendy, impulsive price action above these suspected corrective lows and risk parameters. A relapse below 19.19 will threaten a bullish count while commensurately larger-degree weakness below 18.82 will negate it and resurrect a peak/reversal count that could be major in scope.
These issues considered, a bullish policy remains advised for longer-term commercial players with a failure below 18.82 required to negate this call and warrant its immediate cover and reversal. Shorter-term traders whipsawed out of bullish exposure on 18-Oct’s bearish divergence in momentum are advised to return to a bullish policy and first approach setbacks to suspected 19.86-area support as corrective buying opportunities with a failure below 19.19 negating this specific call and warranting its cover. In lieu of at least sub-19.19 weakness, we anticipate further and possibly accelerated gains to new highs above 20.61.
