Onward. Upward, or Look out Below…

Good Morning:

— We are still enjoying our last swing entries at 4775, yet guarded as this market continues to rip to new all-time highs.

— And the price is, once again, well above the daily mean.

— Our investment theory focuses on mean reversion. We know it will snap back like a rubber band, but we have to know at what price and when.

— I laugh to myself sometimes at all the coding and programming we create just to predict those moments.

— There is a simplicity to this if you can get in sync with the price and meld with it.

— There is a possible measured move to 4950 from the reversal pattern we identified a few writings ago.

— Price could consolidate a few more days or even retest the breakout at 4840 before reaching higher again.

— And in the background remains the measured move from the broad, cup and handle pattern previously discussed on these pages at 5600. But that will take time – likely months. 

— But 5600 is an eventual peak target should the market continue to trend higher. Of course, we could see a blow-off top reach out to that level quickly – a low-probability scenario.

— For now, make sure your stop is about two ticks below the five-day line and for sure at break-even.

A.F. Thornton