RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Oct 28, 2022, 06:45 by Dave Toth

Yesterday’s break below last Fri’s 75.80 low reaffirms the major bear trend and leaves Mon’s 80.80 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recover above to confirm a bullish divergence in short-term momentum and expose a correction higher of indeterminable scope.  Until and unless such 80.80+ strength is shown, the trend remains down on all scales and should not surprise by its continuance or acceleration straight away.  Per such, this 80.80 level is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bearish policy and exposure.

On a broader scale, the daily log chart above shows the extent and 5-wave impulsiveness of the decline from 16-Aug’s 119.59 high and our bearish count introduced in 17-Aug’s Technical Webcast.  It is interesting to note that with today’s continued weakness, this decline has matched perfectly the length of May-Jul’s preceding 133.79 – 82.54 decline.  This 1.000 progression relationship combined with the prospect that this month’s decline from 11-Oct’s 89.78 high might be the completing 5th-Wave of an Elliott sequence down from 119.59 warrants keeping a keen eye on MOMENTUM and the bear’s ability to sustain losses below at least 80.80 and especially 89.78.  Its failure to do so will threaten and then break Aug-Oct’s downtrend and expose a correction or reversal higher of indeterminable scope.  Until and unless such strength is proven, again, the trend remains down on all scales and should not surprise by its continuance.

Indeed, on a weekly log active-continuation basis, the chart below shows the market breaking the (75.63) 61.8% retrace of 2020 – 2022’s entire 48.35 – 155.95 uptrend, with the 1.000 progression of May-Jul’s 155.95 – 82.54 decline taken from Aug’s 119.59 high not cutting across until the 63-handle-area.

Finally and on an even broader monthly log scale, the chart below shows the market’s reversion to deep within the middle-half bowels of the range that has constrained it for the past 14 years.  While we don’t want to underestimate the remaining extent of this clear and present swoon until a countering bullish divergence in momentum alerts us to, we always want to remind traders of the greater odds of aimless whipsaw risk from the middle-half bowels of a range.  This highlights the importance of the bear risk parameters we identified above at 80.80 and 89.78.

These issues considered, a bearish policy and exposure remain advised with a recovery above 80.80 required for shorter-term traders to move to a neutral/sideline position and for longer-term commercial players to pare exposure to more conservative levels.  In lieu of a recovery above at least 80.80, further and possibly accelerated losses remain anticipated.

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