Although the market has yet to recoup 12-Jun’s 131.45 corrective high that we had as a short-term risk parameter to a bearish policy, the extent to which the market has sustained gains above 26-Jun’s 126.60 initial counter-trend high, historically bearish sentiment conditions and rejection of the lower boundary of a multi-year lateral triangle conspire on a developing base/reversal-threat environment that could be significant in scope.  The market’s relatively short-term strength is detailed in the 240-min chart below with 29-Jun’s break above 126.60 confirming at least the intermediate-term trend as up and leaving 28-Jun’s 123.30 low in its wake as a smaller-degree corrective low that can now be used as a short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

The past week-and-a-half’s recovery is easily the most extensive recovery since Dec-Jan’s larger-degree bear market correction.  But while former 132.85-area support from Dec’16 cannot be ignored as a resistance candidate on a weekly log scale basis below, the current 31% reading in our RJO Bullish Sentiment Index is the most pessimistic condition since Dec 2008 and warns of a vulnerability to potentially sharply higher prices now that the market has established some semblance of a more objective bottom defined by 22-Jun’s 115.50 low thath we are now considering our new long-term risk parameter to a new bullish policy.

Finally, the monthly log scale chart below shows the market’s rejection thus far of the lower, up-sloping boundary to an arguable lateral triangle pattern that has constrained this market for years.  Combined with historically bearish sentiment and “enough” of a recovery over the past week-and-a-half to objectively conclude 22-Jun’s 115.50 low is one of developing importance and possibly the END of a 5-wave Elliott sequence down from 24-Jan’s 163.75 high, we believe a new bullish policy is finally warranted.

These issues considered, all previously recommended bearish exposure is advised to be neutralized at-the-market (130.90) and replaced with cautious bullish exposure with a failure below 123.30 required to threaten this call enough to warrant its cover.  In lieu of such sub-123.30 weakness further and possibly accelerated gains are anticipated in a base/reversal-threat environment that could be relatively major in scope.