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The Pattern Repeats: Is It Really This Simple for Bulls?


The similarities between the current pattern and the corrections of 2011 and 2012 are hard to ignore.


The updated 30-minute SPX chart is shown below. Assuming the recent rally off 1451 doesn't mutate into something more complex or unusual, it appears likely to continue higher, though one short-term bearish option is shown on the 3-minute chart.

Click to enlarge

A slightly different take on this most recent rally leg is shown below. The short-term bearish ending diagonal can be ruled out if the market moves just a few cents higher.

Click to enlarge

In conclusion, I continue to feel it's unwise to front-run this market in a bearish fashion -- as I opined on January 2, this is a third wave, and basically that means it's best to simply ride the trend. The only reason I'm still slightly hesitant to publish much in the way of long-term bullish projections is that the market hasn't quite crossed over the long-term inflection points it's reaching. Projections are defined by such inflection points -- assuming those levels are crossed (for example, 902.30 on the Russell 2000 (INDEXRUSSELL:RUT), as outlined and discussed on December 19, 2012.), then it will become much higher probability that we are in a long-term bull market. Trade safe.

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