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1540 Target Reached, Can the Bulls Keep Pushing?


The next key levels to watch.


On Monday, the preferred and first alternate count were both in agreement on higher prices to the 1540 zone, but now we reach an inflection point where they begin to diverge. The expanded flat, shown below, is hard to invalidate, but we should probably scrap that count above 1550 and favor the more bullish option at that point.

In the previous update, I was quite tempted to favor the more immediately bullish interpretation shown above, and I'm now even more tempted to do so -- but we'll wait and see how this plays out with the 1550 zone. If nothing else, we should have an answer fairly soon. Do note that this count is only bearish for a short time, but ultimately suggestive of higher prices to follow.

Click to enlarge

I'm still watching the Philadelphia Bank Index (INDEXDJX:BKX) for clues, as noted on the chart:

Click to enlarge

Finally, an updated trend line chart:

Click to enlarge

In conclusion, there is a slight irony in the present charts, in that the bull outlook, if realized, actually suggests bears would follow with a longer period of corrective activity than they would with the more immediately bearish count. In either case, the intermediate trend presently remains up. It will be interesting to see if bears can put together a stand around 1550 over the near-term, or if they're simply going to head into hibernation for the moment and look to strike again at higher prices. If 1550 is claimed, we have some good ideas of which price levels to watch next. Trade safe.

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