Technicals, February 3, 2012; 8:35am
Today's clear breakout above recent 1327-to-1330-area highs and resistance detailed in the 240-min chart below chalks up last week's short-term bearish divergence in momentum as merely a corrective dip and reinstates the broader developing bull trend. As a direct result of this morning's strength, the market has defined yesterday's 1317 low as the latest corrective low and tightest risk parameter it now is minimally required to fail below to even defer a bullish count, with former 1330-to-1327-range resistance considered new near-term support.
Per these constructive developments, a full bullish policy and exposure are advised for all traders (long- and short-term) with weakness below 1317 required to warrant defensive measures by shorter-term traders with tighter risk profiles.
The secular advance in T-Note prices is clear in the weekly chart below. Threatening this advance is the RSI measure of momentum's warning that the rally is losing strength as well as the highest (77%) reading in the Bullish Consensus measure of market sentiment (www.marketvane.net) since those that have accompanied each of the past two major highs and relapses. And it is these two long-term factors that should alert us to the possibility mentioned above that today's break- as admittedly minor as it is- could be the very first step in a major peak/reversal process. But if this is the case, the market now needs to do a few things:
In sum, and although the market has yet to fail below a longer-term risk parameter pertinent to long-term traders, traders of all risk tolerances are advised to move to a neutral-to-cautiously-bearish policy from current 131.16 prices. Strength above 132.11 is required to negate this call and reinstate the secular advance. Interim recovery attempts are advised to first be approached as corrective selling opportunities with protective buy-stops at 132.12.
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