RJO FuturesCast

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Today’s clear break above Fri’s 175.37 high and 31-Jan’s 175.30 high reaffirms our bullish count introduced in 03-Jan’s Technical Blog and leaves smaller- and larger-degree corrective lows in its wake at 174.77 and 174.08, respectively, that this market is now required to fail below to threaten or negate this specific bullish count.  in this regard these levels represent our new short- and longer-term risk parameters from which a still-advised bullish policy can be objectively rebased and managed.  Former lower-175-handle-area resistance would be expected to hold as new near-term support per this bullish count and ahead of further and possibly accelerated gains straight away.

The daily chart above shows the developing POTENTIAL for a bearish divergence in momentum amidst the prospect that the past week’s rally might be the completing wave of a 5-wave Elliott sequence up from 02-Jan’s 170.19 low.  But PROOF of weakness below 16-Feb’s 174.08 corrective low is required to CONFIRM both prospects to the point of non-bullish action like long-covers.  Until and unless such specific weakness is proven, there is no way to know that this trendy, impulsive sequence up won’t “extend” in an increasingly obvious manner straight away and ultimately test last Sep’s 179 high shown in the weekly chart below.  Indeed, by breaking 31-Jan’s 175.30 high, the market has exposed an area totally devoid of any technical levels of merit shy of last Sep’s major highs.  This does not mean we’re forecasting a move to 179.  But it certainly does mean that until and unless this market weakens below the specific lows and risk parameters discussed above, its upside potential is indeterminable and potentially extreme, including a run at 179 and above.

These issues considered, a bullish policy and exposure remain advised with a failure below 174.77 required for shorter-term traders to step aside and commensurately larger-degree weakness below 174.08 for long-term players to move to the sidelines.  In lieu of such weakness, further and possibly accelerated gains are anticipated straight away.

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