The big question

Isn't the first chart a thing of beauty (click to enlarge)? We'll get to that in a moment.

First, the big question:
Is the current rally corrective and once it is over, we're headed back down OR

the "meltdown" was corrective, it is now over and we're slowly but surely going up again with new highs down the road?

Obviously, nobody knows at this point. Anybody who forcefully declares one way or the other is nothing but a blowhard. But it always helps to establish some sort of "zone of no return" beyond which the question becomes moot. It goes without saying that a point of no return would be if the Dow makes new all-time highs above 14,000 (or conversely new intermediate lows below 12,500). But even before that, Fibonacci aficionados would tell you that if a move is retraced more than 76.4%, than it is very likely not corrective. As you can see on the second chart above (click to enlarge), that would give us a Dow level of 13,670 which is very close to the level (13,695) reached on 8/8 right before the nasty last part of the "meltdown" episode and above which we break the pattern of lower lows and lower highs characteristic of a downtrend.

So to sum it and round it up, if the Dow Jones Industrial Average breaks above 13,700 decisively (on a daily close basis and on above average volume, say), then we could safely (as much as anything can be safe in this field) assume that the previous downtrend was just a correction, the long-term uptrend has resumed and that we will be above 14,000 before long.

One ETF/market for which the big question has been resoundingly answered, as you can see in the first chart, is FXI ,the ETF for the Chinese stock market. A new all-time high was established on Friday .....and it's off to the races, giving the lie to any silly talk of bear market.