RJO FuturesCast

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As a result of yesterday’s continuation of the clear and present downtrend, the hourly chart below shows Fri’s 292.4 high as the latest smaller-degree corrective high this market is now required to sustain losses below to maintain a more immediate bearish count.  From a pure scale perspective, it’s clear that a recovery above 292.4 would be of too small a degree to conclude anything more than another interim corrective hiccup within the broader downtrend.  What such a 292.4+ poke WOULD allow us to conclude is a rejected/defined low of at least some semblance of importance and reliability from which any non-bearish decisions like short-covers and cautious bullish punts could then be objectively based and managed.  And given the market’s intimate proximity to the extreme lower recesses of its massive, lateral multi-year range, such an admittedly tight risk parameter could provide an outstanding risk/reward buying opportunity.

Taking a step back to consider this market’s long-term history, there is no question that the past couple weeks’ continued weakness puts it below a ton of former price action between roughly 296 and 308.  On this broader scale and per any broader bearish count, this market shouldn’t come anywhere close to even former 296-area support-turned-resistance, let alone 24-Jan’s 300.5 corrective high and, we believe, the tightest larger-degree corrective high the market would be expected to sustain losses below to maintain a broader bearish count.

In effect, the bear has once again put itself in a position to PERFORM.  Perform with continued proof of trendy, impulsive, even ACCELERATED 3rd-wave-type weakness straight away that blows May’19’s 283.1 low/support out of the water and eventually Feb’16’s 258 low.  This market has been in this situation four times over the past 3-1/2 years and we’ve required to exact same performance from the bear “way down here”, and it has failed miserably each and every time, suggesting that current 295-to-285-range prices are favorable risk/reward conditions from the bull side for long-term players.

Never wanting to catch the falling knife however, now, as with those previous base/reversal cases, we need the market to stem the clear and present downtrend on even a short-term basis needed to reject/define at least some semblance of a more reliable low from which non-bearish decisions can be objectively based and managed.  We believe an admittedly short-term recovery above 292.4 will satisfy such a requirement and leave a precise low in its wake from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.  Until and unless such 292.4+ strength is proven, a continuation of this clear and present downtrend should not surprise.  Who knows?  Perhaps this time the bear will behave like one and demolish lows and support ranging from 283 to 258.

These issues considered, a bearish policy and exposure remain advised with a recovery above 292.4 required to threaten this call enough to warrant moving to a neutral-to-cautiously-bullish policy.

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