The breakout above the short term downtrend line heralded the follow-through day yesterday. Today the market continued by confirming the breakout above the upper channel line that has developed since the low on 7/1. This type of channel breakout usually indicates that the character of the move has become impulsive as opposed to corrective. It looks like we are near the completion of a small degree third wave. Another pullback tomorrow followed by new rally highs Monday and/or Tuesday would complete this first impulse wave which I believe is most likely wave [a] or wave (1) of [a] of wave B or X up from the 7/1 low. It is a little early to make projections, but the most likely initial target is for the Qs to fill the gap from the 6/28 close at 45.11 up to 46.00. We can project a target from there for wave B to the 6/21 and 5/13 highs of 47.68 and 48.79. Higher prices are possible but this is the most likely target zone.
I like the fact that today there were a number of articles and posts calling this a bear market rally and an oversold bounce, and the Investors Intellegence weekly polls continue to get more bearish. If the current move can complete as an impulse, it should confirm that several weeks of rally are underway. This is not a time to be wildly bullish. B waves can terminate unexpectedly. Short term longs should work well, and the wave B highs will be a good place to exit poorly performing intermediate term trades that were not sold in the May/June selloff.