Today was clear confirmation that the uptrend has resumed in full force. In retrospect, it should have been clear that the much heralded HS Top was too well followed to have been valid. The next one should be a doozy though as it will probably not be given any credence by the public who have now been burned. As it turned out the SP500 simply pullbacked in 3 waves to a shelf of support in the 870 to 880 zone.
Today it closed back above its major median line and almost dead on the minor median line. Once it moves back above the minor median line and resistance in the 944 to 956 zone the upper line of the minor pitchfork will be the probable target, which could be anywhere from 1000 to 1100.
Expect a pullback near term as wave i of C corrects, but from my perspective there is little doubt that the correction has fulfilled its purpose of increasing bearish sentiment. Although the $CPC and the $CPCE did not reach the usual levels associated with bottoms, other sentiment measures such as the Option Buyer's Sentiment Gauge at www.market-hamonics.com did reach a level seen at bottoms.
At this point there are 4 major upside targets for the Qs based on different methods: 1) 40.06, 2) 41.05/41.24/41.56, 3) 42.67, and 4) 43.60. I suspect that the first 2 of these are the most probable, although the others cannot be ruled out.
I will repeat several times that based on my cycle work, I do expect that there could be a major shakeout in August, but it should not be the end of the rally. What we may see is a double bottom with a higher low around mid-August, so don't get whipsawed on that basis alone.
Finally, I would like to re-iterate my view that the top that occurs this fall will not be the high of the bear market rally, which, I believe, based on my cycle work will come in 2010 after a late fall correction in 2009. As we get closer to the current rally top, I will provide more insight into my reasoning on this outcome.