RJO FuturesCast

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In 27-Nov’s Technical Blog we identified 22-Nov’s 3.58 high as our new short-term risk parameter the market needed to sustain losses below to maintain a more immediate bearish count. After severely testing 16-Nov’s 3.49 low, Fri and overnight’s recovery above 3.58 identifies that 3.49-area as one of developing importance and potentially the END of a major 5-wave Elliott sequence down from 11-Jul’s 4.26 high. In this regard 3.49 is considered our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.
Readers of our blog that we’ve been of the opinion for many quarters now that this market has been in a major BASE/REVERSAL PROCESS sine Oct’14’sd 3.18 low. We’ve identified the lower-quarter of the 3-YEAR range between 3.15 and 4.54 as a key base/reversal component along with historically bearish sentiment levels.

Now far be it from us to conclude a major base/reversal count following proof of only smaller-degree strength above a level like 3.58. Indeed, commensurately larger-degree strength above 25-Oct’s 3.69 larger-degree corrective high remains required to confirm the end of a 5-wave Elliott sequence down from 11-Jul’s 4.26 high. But given the:

• textbook appearance of this sequence labeled in the daily log chart above
• the prospect for a “double-bottom” reversal in the hourly chart top
• historically bearish sentiment levels clear in the weekly log active-continuation chart below
• a CONFIRMED BULLISH DIVERGENCE IN WEEKLY momentum on the weekly active-continuation chart below and
• the market’s continued rejection of the lower-quarter of the 3-year range

We do not believe it is too early to move to a new cautious bullish policy. If such a policy is wrong from current 3.60-area prices, the risk is 11-cents. If it is right, the market’s upside potential is indeterminable and potentially extensive (i.e. to at least the upper-quarter of the 3-year range in the months and quarters ahead.
Finally, we would remind traders of the past few years’ virtually identical price action to the major base/reversal process from Dec’08’s 3.05 low that led ultimately to Jun/Jul 2010’s major rally. Also, the Fibonacci fact that the secular bear trend from Jun’12’s 8.49 all-time high to Aug’16’s 3.15 low is identical in length (i.e. 1.000 progression) to BOTH previous bear markets from 1996 to 2000 and 2008 – 2009. Against this long-term backdrop of technical facts traders are urged not to discount the prospect for considerable gains following admittedly short-term strength the past couple days.

These issues considered and while further proof of strength above at least 3.7o remains required to reinforce a major base/reversal count, traders are advised to move to a new cautious bullish policy and exposure from 3.60 OB with a failure below 3.49 required to negate this call. We believe the market’s upside potential to be indeterminable and potentially extensive in the months and quarters ahead.


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