At this date, the most likely scenario is that the market's trajectory has changed lower, but its trend is still positive. We wont likely have confirmation for some time, not until well into the fall probably, when the lower channel band of the new trajectory (bottom blue line) is tested around where it meets the long-term support line (lower red line). This would result in about a15% correction, which feels about right, and would require a lot of mending (the lower trajectory) to work back through resistance and eventually a new high. This also means that there is another down leg still to come in the near future if we don't get above near-term resistance (brown lines) and downtrends (yellow line). If the key support area
(around 15,600) doesn't hold, it would mean the up-trend is broken and a cyclical bear market had taken the place of the old bull. This area should also be tested around where the new down trend (yellow line) also intersects. Expect a lot of volatility
at this point as market forces do battle. Fundamentals should dictate the direction at that point; a bear market if deflation continues to reign, or a resumption of the bull (in a lower CAGR trend) if growth outside of the U.S. is confirmed. All of this could come down to whether the Fed raises rates or not on 9/17. Today's rally reflects the idea at they probably wont, but nothing is certain. Bottom line is to stay defensive for now.