Technicals, January 18, 2012; 6:55am
In Thur afternoon's Technical Blog we discussed the prospect for at least an interim recovery stemming from the combination of the market's proximity to the extreme lower recesses of the past month's range amidst a developing bullish divergence threat in short-term momentum. This divergence was confirmed with Fri morning's break above 10-Jan's 84.35 corrective high and warned of at least further short-term gains to the upper recesses of the past month's range that warranted defensive measures from shorter-term traders with tighter risk profiles. And with overnight's gains above 28-Dec's 86.50 high and longer-term risk parameter detailed in the hourly chart below, a larger-degree correction or reversal higher has now been exposed, warranting defensive measures by longer-term traders as well.
In sum and as a direct result of overnight's break above 28-Dec's 86.50 high, traders are advised to move to a neutral-to-cautiously-bullish policy with the full acknowledgement that the past week's recovery could be the completing c-Wave to a broader bear-market correction. If the rally from last week's 82.80 low is the 3rd-Wave of a broader reversal higher, reinforcing evidence of such should become increasingly clear in the form of sustained, trendy, even obvious strength straight away. "Dying-on-the-vine" upside behavior and a subsequent short-term mo failure below yesterday's 85.42 low would be the first indication of the bear-market-correction count ahead of a resumption of the past quarter's bear trend to new and potentially significant lows below 82.62.
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