RJO FuturesCast

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In our latest E-mini S&P Technical Blog from yesterday, we discussed the resumed erosion following last week’s initial bearish divergence in short-term momentum that presents a short-term but nonetheless developing threat against the bull.  Given the relatively positive correlation between stocks and bitcoin, it isn’t too surprising that the latter has now confirmed a similar bearish divergence in short-term momentum (below 16-Mar’s initial 53475 counter-trend low) as well as broken our short-term risk parameter at 53000 discussed in 15-Mar’s Technical Blog.

Yesterday’s resumption of last week’s initial setback leaves smaller-degree corrective highs in its wake at 57225 and 60280 that it now needs to recover above to jeopardize the impulsive integrity of a more immediate bearish count and rather, expose the past couple weeks’ sell-off attempt as another correction within the secular bull trend.  Per such, these levels serve as our new micro- and short-term risk parameters from which shorter-term traders with tighter risk profiles can objectively base non-bullish decisions like long-covers and cautious bearish punts.  Until and unless this market recoups a least 57225, further and possibly sharp losses should not surprise.

The daily log scale chart above shows the relatively positive correlation between the S&P and bitcoin as well as waning upside momentum over the past four or five weeks that suggests the latest phase of the bull from 26-Feb’s 44555 next larger-degree corrective low in the Mar contract could be the completing 5th-Wave of an Elliott sequence up from Mar’20’s 4210 low that could expose a peak/correction/reversal threat that could be nothing short of major in scope.  Commensurately larger-degree proof of weakness below that 44555 corrective low remains required to CONFIRM the momentum failure on this broader scale, break the bull and expose at least a major correction lower.

In effect, we believe the market has identified 60280 and 44555 as the key directional flexion points heading forward. Shorter-term traders have been advised to neutralize bullish exposure to circumvent the depths unknown of a correction or reversal lower and are further advised to consider a cautious bearish stance from the 53000 level OB with a recovery above 57225 required to negate this specific count and warrant its cover.  Longer-term institutional players and investors are advised to pare bullish exposure to more conservative levels and jettison remaining exposure on the immediate failure below 44555.

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