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SPX and INDU: Are the Bulls Bored Yet? Pretzel Logic

Yesterday, the Dow Jones Industrial Average (INDU) effectively reached my target of January 3.  The preferred and alternate intermediate counts are still both bullish — though there’s one small bear hope still remaining (an ending diagonal, not shown) since the key long-term pivots haven’t been crossed yet.  Bears would basically have to turn the market more or less immediately in order to pull out a stunning upset, but currently that appears to be low probability.

As it turns out, my observation on October 8 of a three-wave rally into the 2012 high, and subsequent expectation that the market would make new highs after the correction, proved to be accurate.

 

The long-term chart of INDU notes the next resistance levels.  If bulls can keep pushing a bit farther, they give themselves a shot to run toward the black dashed median line, and potentially as high as the top of the black channel.
Still no material change in the S&P 500 (SPX), though I presently have some slight concern about the rally from the 1470’s being part of an extended fifth wave (black alt: 3 and 4), and INDU has now been added to the markets which have reached my targets, so I continue to feel it’s prudent to protect profits.  Beyond that, the market is starting to lull all of us into a bullish stupor — and when complacency sets in, the market becomes ripe for unexpected corrections.  The blue trend lines would be the first warnings.  (continued, next page)

I also still feel that the Philadelphia Bank Index may provide some clues to the short-term and whether or not to expect a larger correction in the near future.
In conclusion, the market is still within a third wave rally, so until it gives some signs of a turn, there’s nothing to do but continue to ride the trend.  Trade safe.

 

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