(ES) S&P, Russell Shrug Off S-T Failure As Corrective, Resume Broader Bull
Technicals, February 17, 2012; 7:30am
In yesterday's Technical Webcast we discusses the bearish divergence in momentum below 1337 as threat to the dominant bull trend, acknowledging however that this mo failure was of only a short-term scale and insufficient to conclude anything more than an interim corrective dip. Stalling at the exact (1334) 38.2% retrace of the latest 1296 - 1358 portion of the broader bull detailed in the 240-min chart below before recovering above Wed's 1358 high, the market has confirmed this week's sell-off attempt as merely a corrective dip that consistent with a continued bullish policy.
As a direct result of this recovery, the market has defined yesterday's 1334 low as the latest corrective low and the new short-term risk parameter it now is minimally required to fail below to again threaten an interim correction or steeper reversal. In lieu of such sub-1334 weakness, further and possibly accelerated gains are once again expected straight away.
On a broader scale looking at the daily log chart above, 30-Jan's 1296 low remains as the corrective low we believe this market is required to fail below to confirm a momentum failure of a scale sufficient to threaten the long-term bull. And the market's close proximity to the extreme upper recesses of the past year's range shown in the weekly log chart below is a reason we'd want to be concerned about a more significant reversal lower if the market fails below 1296. But for the time being the clear and present trend is up and a breakout above last May's 1373 high and resistance could expose accelerated gains thereafter.
These issues considered, longer-term traders remain advised to maintain a bullish policy and exposure with weakness below 1296 required to threaten this view enough to warrant taking defensive measures. And if the market can distance itself enough from yesterday's 1334 low in the days/week ahead, reaffirming a broader bullish count, we'll be able to trail that 1296 longer-term risk parameter to 1334. Shorter-term traders whipsawed out of bullish positions below 1337 are advised to approach dips as interim corrections and buying opportunities ahead of continued gains. 1334 is the new short-term risk parameter from which resumed bullish plays can now be objectively based.
Similarly, overnight's recovery above Wed's 8289 high in the Mar Mini-Russell contract confirms the past 1-1/2-weeks' sell-off attempt as a 3-wave and thus corrective affair consistent with a broader bullish count. This recovery defines yesterday's 8063 low as the latest corrective low and tightest risk parameter this market is now required to fail below to defer or threaten a bullish policy. Per such, shorter-term traders with tighter risk profiles whipsawed out of longs on yesterday's failure below 8103 are advised to resume a bullish policy and exposure with protective sell-stops at 8063. A bullish policy remains advised for long-term players with a failure below 30-Jan's 7846 corrective low required to confirm a bearish divergence in momentum of a scale sufficient to threaten the major bull and required defensive measures.
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