RJO FuturesCast

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In 26-Apr’s Technical Blog we discussed that day’s bearish divergence in daily momentum in the Jul contract that, along with historically frothy sentiment/contrary opinion levels and an arguably complete and major 5-wave Elliott sequence up from Oct’s low, confirmed a peak/correction/reversal count that could be major in scope.  This morning’s break below both last week’s 404.9 low and especially below 01-Apr’s 402.6 low and key long-term risk parameter confirms the same topping threat in the Dec contract.  This resumed weakness leaves smaller- and larger-degree corrective highs in its wake at 413.5 and 429.6 that this market must now recoup to threaten and then negate a broader bearish count.  Until and unless such strength is proven, the portion of the decline from 21-Apr’s 429.6 high cannot be ignored as the dramatic 3rd-Wave of a major reversal lower.  Per such, 413.5 and 429.6 serves as our new short- and long-term risk parameters from which non-bullish decisions like long-covers and new bearish punts and hedges can now be objectively based and managed.

Former 403/404-handle-area support is considered new near-term resistance ahead of further and possibly steep, accelerated losses straight away.

The daily log chart above and weekly log chart below show today’s confirmed bearish divergence in WEEKLY momentum below 01-Apr’s 402.6 initial counter-trend low that arguably defines 23-Mar’s 436.8 as the orthodox end to a major 5-wave Elliott sequence from 18Oct21’s 324.7 low.  Combined with historically frothy levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC, our three key technical elements of a major peak/reversal threat are present.  Indeed, the extent to which the Managed Money community has its neck sticking out on the bull side is fuel for downside vulnerability as the overall market forces the capitulation of this exposure.  This capitulation is currently taking place in hogs and warns of potentially steep, even relentless losses straight away.

These issues considered, any/all previously recommended bullish policy and exposure for longer-term commercial players has not only been nullified, these players are advised to move to a new bearish policy and exposure from current 402.0-area prices OB with a recovery above at least 413.5 and preferably 429.,6 required to pare and then neutralize this exposure.  Shorter-term traders with tighter risk profiles remain advised to maintain a bearish policy and exposure with a recovery above 413.5 required to negate this specific call and warrant its cover.  In lieu of such strength, further and possibly steep, accelerated losses straight away are anticipated.

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