Technicals, March 14, 2012; 8:55am
Today's clear break below 06-Mar's 1663.4 low reaffirms the developing downtrend first signaled by 29-Feb's mo failure below 16-Feb's 1706.7 corrective low shown in the daily log chart below. But perhaps the most important by-product of this latest spate of weakness is the market's definition of Mon's 1717.4 high as the latest corrective high and risk parameter this market is now required to recoup to stem this slide and expose the sell-off attempt from 28-Feb's 1792.7 high as the bull-market correction we suspect it is. In lieu of such 1717.4+ strength, further, if intra-range losses remain expected.
Taking a big step back to consider this market's longer-term history, the weekly log close-only chart shows the secular bull trend to still be the dominant technical factor, with Aug-Dec'11's Fibonacci minimum 23.6% retrace of Apr''09 - Aug'11's 868 - 1877 steep rally an indication that the lateral price action from last year's high is corrective/consolidative within that major bull. In this regard and as long as 29-Dec's 1523.9 low remains intact as the lower boundary to the broader range, this month's slide is considered a corrective buying opportunity ahead of the eventual resumption of the secular advance.
Given the clear and present intermediate-term downtrend and the fact that there's a lotta green between spot and Dec's 1523.9 low, the market is required to confirm a bullish divergence in momentum in order to stem the slide and define a more reliable low, support and risk parameter from which bullish plays can be objectively based. We've already discussed the importance of Mon's 1717.4 high as a longer-term risk parameter, but the 240-min chart below shows today's 1682.8 high as a smaller-degree corrective high, the break above which is the minimum strength needed to jeopardize the impulsive integrity of an immediate bearish count. This 1682.8 low is considered the risk parameter for shorter-term traders with tighter risk profiles.
In sum, further lateral-to-lower prices remain expected with strength above at least 1682.8 and preferably 1717.4 required to threaten or stem this slide and warrant a move back to a bullish policy. In lieu of such strength, further losses remain expected within the long-term but (we think) consolidative range between 2011's 1923 high and (29-Dec's) 1523.9 low. Ultimately, we anticipate a favorable risk/reward buying opportunity. But there's no way to know whether this chance will develop around the (1621) 61.8% retrace of Dec-Feb's 1523.9 - 1792.7 rally or much closer to the 1524 lower boundary to this range.
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