RJO FuturesCast

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Fri’s break below 27-Jan’s 3233 low reaffirms our peak/correction count introduced in 30-Jan’s Technical Blog and leaves Fri’s 3298 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recover above to render the past couple weeks’ sell-off attempt a 3-wave and thus corrective affair that might then re-expose the secular bull.  Per such, this 3298 level serves as our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively rebased and managed by shorter-term traders with tighter risk profiles.

The Fibonacci fact that this 3298 high is the exact 61.8% retrace of the preceding 3338 – 3233 decline reinforces this count and the importance of this smaller-degree corrective high as a risk parameter.

Given the magnitude of the secular bull market, it’s grossly premature to conclude the past couple weeks’ setback as anything more than another interim correction and ultimately another buying opportunity for long-term players.  But until and unless this market recoups at least Fri’s 3298 high needed to render Jan’s sell-off attempt a 3-wave and thus corrective structure, there is no way to know that the decline from Fri’s 3298 high isn’t the 3rd-wave of a more more protracted correction straight away.

Needless to say, 22-Jan’s 3338 high is one of obvious importance and our new long-term risk parameter the market needs to recoup to mitigate any broader corrective count, reinstate the bull and warrant a return to a full and aggressive bullish policy.

In sum and with the market’s downside potential indeterminable until and unless the market recoups at least Fri’s 3298 high and short-term risk parameter, a neutral-to-cautiously-bearish policy is advised.

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