Trouble in Sugarland; Move to Sidelines

October 28, 2016 8:28AM CDT

This morning's break below our short-term risk parameter defined by 20-Oct's 22.35 low negates our resumed bullish call in Mon's Technical Blog and resurrects either a larger-degree correction or possibly a major reversal lower.  As a direct result of this resumption of the past MONTH'S slide detailed in the 240-min chart below, the market has identified Mon's 23.32 high as the latest smaller-degree corrective high and new short=term parameter from which the risk of any non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.  Former 22.35-to-22.52-range support should now provide resistance if something bigger to the bear side lies ahead.

Sugar 240 min\

Sugar Daily

 

From a longer-term perspective shown in the daily log chart above and weekly log chart below, the 21.25-areathat capped this market as resistance for 2-1/2-months between late-Jun and mid-Sep remains as a key new support candidate with the still-arguable secular uptrend.  However, our proprietary RJO Bullish Sentiment Index remains at historically frothy levels typical of major peak/reversal environments.  And now that at least the intermediate-term trend is down and the market has confirmed specific, objective highs and risk parameters above it, market sentiment has become an APPLICABLE technical tool that warns of a vulnerability to lower prices that could be significant.

In sum and while commensurately larger-degree weakness below our long-term risk parameter defined by 01-Sep's 20.10 major corrective low remains required to truly break the major uptrend, both short- and longer-term traders are advised to move to a neutral-to-cautiously-bearish policy as a result of today's short-term failure below 22.35.  Strength above 23.32 is required to negate this call and resurrect the secular bull trend.

Sugar Weekly

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.