Technicals, October 31, 2011; 7:30am
The extent and impulsiveness of Fri's recovery above 25-Oct's 3.888 high breaks at least the short-term downtrend from 17-Oct's 4.039 high. This is clear. But against a backdrop of waning downside momentum on a daily scale, the market's recent position at the extreme lower recesses of the past couple years' range, historically pessimistic sentiment that in the past has warned of larger-degree recoveries, and a time of seasonal strength, traders are urged to acknowledge this relatively minor strength as possibly the start of a base/reversal environment that could produce significant gains in the weeks and months directly ahead. As a result of the past few days' recovery, traders are advised to move to a neutral-to-cautiously-bullish policy with weakness below Thur's 3.724 low required to negate this call and reinstate this year's broader bear. This said, an interim 3-wave corrective retest of last week's low would not be unexpected as part of this broader basing/reversal process in the days ahead.
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