RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Dec 07, 2022, 09:37 by Dave Toth

In 28-Nov’s Technical Webcast on the Dec contract, we discussed a peak/reversal count that warned of potentially steep losses in the period ahead.  While the Dec contract remains below our defined bear risk parameters, the hourly chart of the now-prompt Feb contract below shows late-Nov/early-Dec’s impulsive recovery above analogous bear risk levels that negated that specific bearish count.  However, the Feb contract’s continued gross inability to SUSTAIN trendy, impulsive gains north of the 91-handle maintains what we believe is a multi-quarter peak/reversal process in the prompt contract and a new secular bear market on an active-continuation basis.  As a result and while we do not advise chasing bearish exposure lower, preferring for a corrective 2nd-Wave rebuttal to establish bearish exposure, we’re identifying Mon’s 91.90 high as one of developing importance and our new key parameter from which longer-term commercial players can objectively base and manage the risk of non-bullish decisions like long-covers and new bearish punts and hedges.

On a broader scale, the daily chart of the Feb contract above shows Mon’s recovery above both 17-Nov’s 91.35 high and 26-Ocxt’s 91.80 high nullifying 28-Nov’s bearish divergence in momentum.  this negation rendered Oct-Nov’s 91.80 – 83.72 decline a 3-wave and thus corrective event that gave the long-term bull every opportunity in the world to PERFORM above 91.80.  But rather, the bull once again failed miserably to perform at 91-handle-plus levels like it has done repeatedly for the past FOUR MONTHS.  Amidst still-frothy levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC, this merely flagging price action and reinforced resistance from the general 2-handle-area, minimally, questions the risk/reward merits of a continued bullish policy and exposure ‘up here”.  At most, these facts contribute to a peak/reversal-threat process that warn of potentially protracted, even relentless losses in the weeks and months ahead.  If this count is wrong, all the bull has to do is take our Mon’s 91.90 high.

On an active-continuation basis, the weekly log chart above shows a clear and present and major downtrend from 31-Mar’s 127.32 high in which Oct-Dec’s recovery attempt has thus far stalled within pennies of the (91.68) 505 retrace of Jul-Oct’s suspected 3rd-Wave decline from 115.17 to 72.97.  Left unaltered by a recovery above 91.90, this count warns of a 5th-Wave resumption of this downtrend to eventual new lows below 72.97.

On an even longer-term basis shown in the monthly log active-continuation chart below, and as we’ve been discussing since early-May’s bearish divergence in weekly momentum, the market’s proximity to and total rejection of the extreme upper recesses of its historical lateral range warned of at least a reversion to the middle-half bowels of this range and potentially a major reversal of a complete and massive 5-wave Elliott sequence from Apr’20’s 41.590 low.  This major peak/reversal count and new secular bear market remain intact.

These issues considered, traders remain advised to move to a long-term bearish policy and first approach recovery attempts to the 89.25-to-89.75-area as corrective selling opportunities with a recovery above 91.90 negating this call and warranting its cover.  In lieu of such 91.90-+ strength, we anticipate further and possibly steep, protracted losses in the weeks and months ahead.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.