Yesterday, the intermediate trend flipped bullish when the top of the intermediate range envelope was broken to the upside for the first time since the Top Spotter at 2951 on 21-Sep-18.
That’s a pretty big deal if the market can continue to hold above the intermediate stop/reverse line, which is presently located at 2626.25.
The broad market is now rated BULL 2, which is the second stage of a short-term rally.
click image to enlarge
What makes this development particularly interesting is that for only the 10th time in the past 10 years, we have a stop sweep/reversal setup on the weekly bars. This is what I call The Weekly Bar Paradigm, and I have been pointing out each of these setups here for years now.
With a move back above the last higher weekly four-bar pivot low at 2607, we now have the potential makings for yet another perfect entry in the secular bull market that has been impressively trucking along since the 2009 bottom.
The reason I emphasize the word ‘potential’ is because we still have 2/3 scenarios where that recent Bottom Spotter low at 2316.75 could still be tested…
Scenario One: The correction bottom is in at 2316.75 and will not be touched again on a pullback–similar to what happened at numbered occurrences 1, 3, 4, 5, 7, 8, and 9 on the weekly bar chart above.
Scenario Two: We get an eventual double bottom–similar to what happened after numbered sequences 2 and 6 on the chart above.
Scenario Three: We get an eventual sharp reversal back below 2316.75 that fails to retake that level.
To my thinking the scenario order above represents the order of the odds going forward. We will eventually get a pullback, of course, and a cross below the short-term stop/reverse line (currently at 2602.50) will let us know when that pullback starts. Until then, it’s all good for the bulls.
Seriously, aren’t Stops and Target’s Spotter Signals just flat-out amazing? 🙂