RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

While the hourly chart of ICE day-session prices below does not yet show it, overnight price action indicates prices above a very minor intra-day corrective high from Mon at 85.46.  This would confirm a bullish divergence in very short-term momentum, defining Tue’s 791.0 low as one of developing importance and possibly the END of a broader 5-wave sequence down from 29-Apr’s 1128 high.  While commensurately larger-degree strength above 28-Jun’s 908.3 larger-degree corrective high is required to confirm a bullish divergence in DAILY momentum that would reinforce such a count, we’re identifying Tue’s 791.0 low as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively base non-bearish decisions like short-covers and cautious bullish punts.

The daily log scale chart above shows the nicely developing POTENTIAL for a bullish divergence in momentum.  This indicator will be considered CONFIRMED to the point of non-bearish action by longer-term commercial players on a proof of larger-degree strength above 28-Jun’s 908.3 ICE day-session corrective high.

The prospect that late-Jun/early-Jul’s continuation of the past couple months’ swoon is the completing 5th-wave of an Elliott sequence down from 29-Apr’s 1128 high is labeled above.  Combined with an extraordinarily quick 38.2% retrace of the ENTIRE 3-YEAR secular bull market from May’19’s 427.5 low to 17-May’s 1219 high on a weekly log active-continuation basis below would seem to be a reinforcing factor to an interim base/correction count if/when the market proved larger-degree strength above 908.3.

If/when such 908.3+ strength stems Apr-Jul’s 5-wave decline in the Nov contract, we would anticipate a potentially extensive but corrective rebuttal to what we believe is only the initial A- or 1st-Wave of a massive peak/reversal process.  As the forces that drive such a mega-bull trends typically don’t evaporate quickly, it is common for markets to rebut initial counter-trend decline with often times extensive corrective recoveries within such major peak/reversal PROCESSES.  We believe a recovery above 908.3 will expose such a correction where the 50% and 61.8% retraces of Apr-Jul’s 1128 – 791 decline don’t cut across until the 944- and 985-areas.  And such a correction could span a month or more.  To nullify this prospect, all the bear’s got to do is resume with a relapse below Tue’s 791.0 low.

These issues considered, shorter-term traders are advised to neutralize all recently recommended bearish exposure and even consider a cautious bullish punt with a failure below 791.0 negating this call, reinstating the bear and warranting a return to at least a cautious bearish stance.  Longer-term commercial players are advised to pare bearish exposure to more conservative levels and reverse into a cautious bullish policy on a recovery above 908.3.

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