(KC) Coffee Base/Reversal Count Takes Another Step; Defines New $2.2970 Risk

Today's impulsive breakout above Mon's 243.55 high detailed in the 240-min chart below reaffirms at least the intermediate-term trend as up and contributes to our longer-term premise discussed in 06-Oct Technical Blog and special report (attached below) that the market is in the early stages of a base/reversal environment that could be major in scope. As a direct result of this building strength, the market has defined yesterday's 229.70 low as the latest corrective low that we believe is the minimum risk parameter this market is now required to fail below to threaten our preferred bullish count, render Oct's recovery attempt a 3-wave and thus corrective affair, and resurrect this year's broader bear trend. In lieu of such sub-229.70 weakness, further and possibly accelerated gains are expected straight away.

Both the daily log chart above and the weekly log chart below show this year's 308.90 - 219.80 sell-off attempt to be a 3-wave affair thus far. Left unaltered by new lows below 219.80 and against a still-arguable secular bull trend, this 3-wave structure is considered a correction and thus consistent with the ongoing major advance that ultimately warns of at least one more round of highs above 308.90. The technical facts that this year's setback stalled within a penny of the Fibonacci minimum 38.2% retrace of Feb'10 - May'11's 128.25 - 308.90 rally amidst a drop in bullish sentiment to its most pessimistic level in over two years would seem to contribute to a broader basing/reversal count.

In sum, a bullish policy and exposure remain advised with weakness below 229.70 now required to threaten this view enough to warrant moving to a neutral/sideline policy. In lieu of such sub-229.70 weakness, further and possibly accelerated gains are expected straight away. Traders are also advised to maintain the Dec 250 / Jan 270 call diagonal position recommended in 13-Oct's Trading Strategies Blog that may now be coming into its own as the market approaches the 250 strike where the high gamma of the long call should help this strategy start to sing.

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