RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

With the market’s recovery the past couple days above last Wed’s 16.18 initial counter-trend high, the resulting bullish divergence in short-term momentum confirms at least the intermediate-term trend as up. This resumed strength leaves 14-Dec’s 15.855 low in its wake as a recent smaller-degree corrective low that the market is minimally required to sustain gains above to maintain the intermediate- OR longer-term uptrend. In this regard that 15.855 low may be considered a short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

This is an important identification because, relative to late-Nov/early-Dec’s plunge, this current rebound attempt still falls well within the bounds of a mere (4th-wave) correction ahead of a (5th-wave) resumption of the preceding downtrend. A failure below 15.855 is now required to re-tilt the directional scales downward. In lieu of such sub-15.855 weakness the 240-min chart below shows virtually no levels of any technical between spot and a 16.55-to-16.60-area od former support-turned-resistance that can be considered a resistance candidate.



Until this market shows weakness below at least 15.855 and certainly last week’s 15.635 low, three factors exist or have developed that warn that the past week’s relatively minor rebound could morph into a more shocking, extensive rally:

  1. the market’s rejection thus far of the lower-quarter of the 15.14-to-18.65-range that has dominated price action for the past YEAR
  2. the relapse in market sentiment to historically low levels that have warned of and accompanied major rebounds and rallies the past two years, and
  3. the Fibonacci fact that the decline from 17-Nov’s 17.385 high came within 2.5-cents of the (15.66) 1.000 progression of the preceding drop from 08-Sep’s 18.29 high to 04-Oct’s 16.555 orthodox low rather than 06-Oct’s 16.345 arguably “rogue” low.


We would also remind traders that from a very long-term perspective shown in the monthly log scale chart below, the market remains in a major BASE/reversal process following early-2016’s break of the secular bear trend from Apr’11’s 49.82 all-time high. If correct, this count contends that the price action down from Jul’16’s 21.225 high to Jul’17’s 15.145 low (or possibly last week’s 15.635 low) is a B- or 2nd-Wave correction ahead of an eventual resumption of the early-16 rally to levels potentially far above last year’s 21.225 high. Might this $6.00+ move be starting from last week’s 15.635 low from the lower-quarter depths of the past year’s range? Until the market re-proves weakness below 1.635, the answer is “yes”.

These issues considered, traders are advised to return to a cautious bullish policy from current 16.25-area prices OB (perhaps via an option strategy) with a failure below 15.855 required to threaten this call enough to warrant a return to the sidelines. In lieu of such sub-15.855 weakness further and possibly surprising gains are expected.


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