Trail S-T S&P Bull Risk to 2,262 | RJO Futures

February 1, 2017 9:26AM CST

The market has yet to provide any evidence to threaten the long-term uptrend shown in the weekly log scale chart below so our general stance remains positive.  The RATE of ascent has slowed since mid-Dec however so traders are advised to beware of a bearish divergence in shorter-term momentum that would expose an interim corrective setback.

Emini 240 min Chart

Emini Daily Chart

Both the daily log scale bar chart above and daily log close-only chart below show the market generally sustaining last week's gains above former 2270-area resistance-turned-support.  But while yesterday's 2262 intra-day low is an extraordinarily tight/conservative risk parameter for such a long-term bull, we fear a failure below this point after yesterday/today's rebound will expose at least an intermediate-term correction that could be relatively steep.

Emini Daily Chart

Drilling down to a 240-min chart below, the sell-off attempts from 13-Dec's 2273 high have all been labored, choppy, 3-wave affairs as labeled.  This is exactly what we expect from corrective attempts swimming against the bullish current.  The latest setback from 26-Jan's 2300 high however looks to be a trendy, impulsive structure that may only be the a- or 1st-Wave "start" of a more protracted correction.  A relapse below 2262 would confirm this and could expose a relatively steep correction of the rally from 04-Nov's 2081 low close shown in the daily chart above.  In lieu of such sub-2262 weakness however there's no way to know that low didn't COMPLETE a correction from 2300 ahead of the secular bull's resumption.

These issues considered, a bullish policy and exposure remain advised with a failure below 2262 required for shorter-term traders with tighter risk profiles to move to the sidelines and longer-term players to pare bullish exposure to more conservative levels as the depth of a subsequent correction would be indeterminable at that time.  In lieu of such sub-2262 weakness a continuation of the secular advance to new highs above 2300 is anticipated.

Emini 240 min Chart

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