RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday’s break below 21-Nov’s 97.935 low reaffirms the nearly-three-month downtrend and leaves Tue’s 98.01 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in momentum and at least threaten the broader slide. Shown in the daily chart below, such a 98.01+ bullish divergence in mo would be one of relatively minor scale, leaving the market still below a ton of former price action that could easily provide resistance ahead of resumed losses. But such an admittedly smaller-degree divergence would at least reject/define a low and support from which non-bearish decisions like short-covers and cautious bullish punts could be objectively based and managed.

In this regard 98.01 becomes our new short-term risk parameter from which a still-advised bearish policy and exposure can be objectively rebased and managed. Only a glance at the daily chart is needed however to see that commensurately larger-degree proof of strength above 03-Nov’s 98.10 next larger-degree corrective high remains required to break the broader downtrend from 08-Sep’s 98.445 high.
From a much longer-term perspective we remain of the opinion that Jun’16-to-Mar’17’s decline is just the initial 1st-Wave of a new secular bear market that could span a generation. While Mar’s low and support remains intact however, there’s no telling how long the market could waft within the past eight months’ range as part of a suspected 2nd-Wave correction within this new bear market.

It’s also possible that 09-Sep’s 98.415 high corrective close and exact 50% retrace of the preceding 99.04 – 97.805 decline on a weekly closed-only basis above completed the correction, leaving the market poised for a resumption of last year’s downtrend that preceded it. Clearly however, the entire 97.65-to-97.77-area of former resistance-turned-support and the exact 38.2% retrace of Sep’13 – Jun’16’s 95.54 – 99.10 rally remains as THE PIVOTAL GATEWAY to such a long-term bearish count. And while this key area of support remains intact, we much remain diligent in watching for any momentum failure from the lower-quarter of the 8-month range that would not only arrest the clear and present downtrend, but perpetuate a broader lateral trading range environment that could continue to imprison this market for months or quarters ahead. Herein lies the importance of identifying corrective highs and risk parameters like 98.01 and 98.10.


In sum, a bearish policy remains advised with a recovery above 98.01 required for shorter-term traders to move to the sidelines and longer-term players to pare bearish exposure to more conservative levels. Subsequent gains above 99.10 are required for longer-term players to jettison the position altogether. In lieu of such strength further and possibly accelerated losses remain expected.


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