RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


Given two full months of peak/reversal-threat behavior, the market is far from out of the woods and, indeed, is just a stone’s throw away from 29-Oct’s pivotal 2603 low.  However, the nicely developing POTENTIAL for a bullish divergence in short-term momentum is clear in the 240-min chart below.  And stemming from the extreme lower recesses of the past month’s range would be an added benefit if CONFIRMED by strength above 21-Nov’s 2671.25 minor corrective high.  Per such we are lowering our short-term risk parameter to 2672, the recovery above which will confirm this admittedly minor bullish divergence in momentum that will allow us to conclude only a minor bottom but one from which shorter-term non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

E-Mini S&P 500 240 Min Chart

E-Mini S&P 500 Daily Chart

The daily log chart above shows the preponderance of the past couple months’ price action that this market remains BELOW.  A bullish divergence in short-term momentum will not allow us to conclude the start of something bigger to the upside.  But given the:

  • market’s close proximity to 29-Oct’s 2603 low
  • historically bearish sentiment levels typical of broader BASE/reversal-threat conditions shown in the weekly log chart below and
  • the similarity thus far of the past couple months’ price action to Jan-Apr’s previous bull market correction

we would not want to underestimate the market’s ability to recover more significantly before year’s end.

These issues considered, a bearish policy remains advised with a recovery above 2672 sufficient to warrant moving to a neutral-to-cautiously-bullish stance with a subsequent relapse below Fri’s 2626 low required to negate this call and re-expose a broader bearish count.

E-Mini S&P 500 Weekly Chart


Given the relatively negative correlation of late between S&Ps and Treasuries, it doesn’t come as a surprise that the potential for a bearish divergence in short-term mo is developing in Dec T-notes as indicated in the 240-min chart below.  This indicator will be considered CONFIRMED to the point of non-bullish action like long-covers on a failure below 21-Nov’s 119.005 minor corrective low.  Per such we are identifying 119.000 as our new short-term risk parameter to a still-advised bullish policy.

10-Year Note Dec '18 240 Minute Chart


10-Year Note Daily Chart

While a sub-119.00 mo failure would be of only a minor scale, the Fibonacci fact that it be stemming from the exact (119.14) 61.8% retrace of Aug-Oct’s 120.24 – 117.135-portion of the secular bear trend would seem to reinforce its relevance.  Also, the recovery THUS FAR from 08-Oct’s 117.135 low is clearly only a 3-wave affair that, left unaltered by continued impulsive strength above 119-1/2, easily fits as a mere correction consistent with the secular bear market shown in the weekly chart below.  Moreover, a sub-119.00 bearish divergence in momentum would be seen as a reinforcing proxy to a bullish count in S&Ps.

These issues considered, a bullish policy remains advised with a failure below 119.00 required to move to a neutral-to-cautiously-bearish stance with subsequent strength above 119.15 required to negate that call.

10-Year Note Weekly Chart



The technical construct and expectations for the Dec19 Eurodollar market are virtually identical to those detailed above in Dec T-notes with last Wed’s 96.89 low being the latest smaller-degree corrective low and new short-term risk parameter the market needs to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will confirm a bearish divergence in momentum, break the uptrend from 08-Nov’s 96.71 low and expose at least a more extensive, if intra-range correction lower.

Eurodollar Dec '19 240 Minute Chart


Eurodollar Dec '19 Daily Chart

Here too the recovery from 18-Oct’s 96.71 low is thus far only a 3-wave structure as labeled in the daily chart above.  Furthermore, it has returned to an area of key former support around the 96.95-area from mid-May until mid-Sep that, since broken, is considered a key new resistance candidate.  If there’s a time and place for this suspected correction to fail and yield once again to the secular bear, it is here and now.

These issues considered, a bullish policy remains advised with a failure below 96.89 required to move to a neutral-to-cautiously-bearish stance with subsequent strength above 97.00 required to negate this call.

Eurodollar Dec '19 Weekly Chart

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.