RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

JUL CRUDE OIL

Fri’s break above last Wed’s 38.18 high reaffirms our longer-term base/reversal count introduced in 30-Apr’s Technical Blog and leaves smaller- and larger-degree corrective lows in its wake at 35.88 and 31.14, respectively, that the market is now required to fail below to threaten and then negate a clear and present uptrend that can now look back on six weeks of history.  Per such, these levels serve as our new short- and longer-term risk parameters from which a still-advised bullish policy can be objectively rebased and managed.

If there’s a prospective fly in the bullish ointment, and UNlike diesel and gas, our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC shows how quickly and the extent to which this group has flooded back to the bull side.  Indeed, at a current 90% level reflecting a whopping 430K long positions to just 50K shorts, this indicator warns of a potentially protracted corrective rebuttal to the past six weeks’ impressive, impulsive rally IF the market fails to sustain recent gains above 31.14 that would, in fact, break the uptrend.  Traders are reminded however that sentiment/contrary opinion is not an applicable technical tool in the absence of such an accompanying momentum failure.

These issues considered, a bullish policy and exposure remain advised with a failure below 35.88 required for shorter-term traders to step aside and commensurately larger-degree weakness below 31.14 for longer-term players to do the same.  Until and unless such weakness is proven, further and possibly accelerated gains should not surprise.

JUL HEATING OIL

With the exception of market sentiment, the technical construct of heating oil is the same as that detailed above in crude, with Fri’s continuation of the bull leaving smaller- and larger-degree corrective lows in its wake at 1.0462 and 0.9562, respectively, that now serve as our new short- and longer-term risk parameters from which a still-advised bullish policy and exposure can be objectively rebased and managed.  Former 1.07-to-1.10-area resistance would be expected to hold as new near-term support per this preferred bullish count.

While the recovery from 28-Apr’s 0.6724 low has retraced 50% of Jan-Apr’s 2.1056 – 0.6724 meltdown on a weekly log scale basis below, both the Bullish Consensus (marketvane.net) and our proprietary RJO Bullish Sentiment Index show sentiment/contrary opinion levels near to historically pessimistic levels that contributed to our base/reversal count following early-May’s bullish divergence in momentum and continues to warn of a vulnerability to higher levels. These issues considered, a bullish policy and exposure remain advised with a failure below 1.0462 required for shorter-term traders to move to the sidelines and for longer-term players to pare exposure to more conservative levels.  Commensurately larger-degree weakness below 0.9562 is required for long-term players to neutralize remaining exposure to circumvent the depths unknown of a more protracted correction lower.  In lieu of weakness below these specific levels, further and possibly accelerated gains remain expected.

JUL RBOB

The technical construct and expectations for RBOB are identical to those detailed above in heating oil with recent corrective lows at 1.0917 and 0.9891 considered our new short- and longer-term risk parameters from which a still-advised bullish policy can be objectively rebased and managed.

On a broader scale, the fact that our RJO Bullish Sentiment Index actually FELL the past few weeks to a level (69%) lower than those that warned of and accompanied late-Apr’s low and reversal infers the Managed Money community is not embracing this clear and present uptrend.  This warns of not only higher prices, but potentially accelerated gains straight away. In sum, a bullish policy and exposure remain advised with a relapse below at least 1.0917 required to pare or neutralize exposure.  In lieu of such weakness, further and possibly accelerated gains straight away should not surprise.

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