RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

In last Fri’s Technical Blog following that day’s bullish divergence in short-term momentum, we raised the prospect that Feb-Mar’s entire sell-off attempt from 04-Feb’s 125.83 high to 07-Mar’s 115.37 low as a 3-wave and thus corrective affair that warned of a resumption of the secular bull market that preceded it.  This prospect was confirmed with this morning’s impulsive bust out above both our short-term risk parameter and resistance defined by 01-Mar’s 123.31 high AND 04-Feb’s key 125.83 high and our long-term risk parameter, reinstating and reaffirming the secular bull trend.

This resumed major uptrend leaves 07-Mar’s 115.37 low as the latest larger-degree corrective low and our obvious new long-term risk parameter from which a resumed bullish policy and exposure can be objectively rebased and managed by longer-term commercial players.  On a shorter-term scale and per what we believe is an accelerating 3rd-Wave up from Tue’s 117.05 low detailed in the 240-min chart below, this market shouldn’t come anywhere near former 121.73-to-121.49-area resistance-turned-support, let alone break it, if this bullish count is correct.  Per such, we’re defining 121.40 as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can rebase and manage the risk of a resumed bullish policy and exposure.

While the market has yet to take out early-Feb’s 129.37 high in the then-prompt Mar contract on a weekly active-continuation basis below, today’s break above 04-Feb’s 125.83 high in the now-prompt May has to be respected as the resumption of the secular bull market until and unless it threatens such a count with proof of weakness below at least the 121.40-area.  If this bullish count is correct ahead of further and possibly accelerated gains, we would expect the market to “hold” above former 123.30-to-123.10-area support.

As discussed over the past month and as everyone in the world is aware, sentiment/contrary opinion levels remain at stratospheric heights typical of major PEAK/reversal environments.  We have no doubt whatsoever that this factor will be a key contributing element to an eventual peak/reversal that will be major in scope.  But now that the major bull trend has resumed, sentiment is not an applicable technical tool in the absence of an accompanying confirmed bearish divergence in momentum needed to break the clear and present and major uptrend.  Herein lies the crucial importance of certainly 07-Mar’s 115.37 larger-degree corrective low and even our short-term risk parameter at 121.40.  But until such weakness is proven, still-frothy sentiment levels will NOT necessarily inhibit further and possibly steep price gains.

These issues considered, all previously recommended bearish policy and exposure have been nullified.  Furthermore, traders are advised to return to a bullish policy and first approach setback attempts to the 125.50-to-125.00-area as corrective buying opportunities with a failure below 121.40 negating this call and warranting its cover.  In lieu of weakness below at least 121.40, further and possibly accelerated gains should not surprise.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.