RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Nov 04, 2022, 10:23 by Dave Toth

Today’s break above Wed’s 14.55 high reaffirms our interim bullish count introduced in 12-Oct’s Technical Blog calling the recovery from 06-Oct’s 13.62 low in the now-prompt Jan contract a correction of Sep-Oct’s decline within a broader peak/reversal-threat process dating from 09-Jun’s 15.88 high.  The important by-product of this continued intra-range rally is the market’s definition of yesterday’s 14.28 low as the latest smaller-degree corrective low this market is required to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will confirm a bearish divergence in short-term momentum, arrest the recovery and possibly re-expose a peak/reversal threat that has been months in the making.  Per such, this 14.28 level serves as our new short-term parameter from which the risk of an interim bullish policy and exposure can be objectively rebased and managed.

From a long-term perspective, the facts on which our major peak/reversal count is predicated remain:

  • 23-Jun’s bearish divergence in WEEKLY momentum amidst
  • historically frothy sentiment/contrary opinion levels
  • the extent and impulsiveness of Jun-Jul’s initial counter-trend swoon
  • labored, 3-wave corrective behavior to 13-Sep’s 15.12 high and that day’s 14.98 Globex day-session high
  • 30-Sep’s bearish divergence in daily momentum below 08-Sep’s 13.78 low that
  • defines 13-sep’s 14.98 high as the end or upper boundary of the suspected 2nd-Wave correction within a massive peak/reversal process from Jun’s 15.88 high.

To negate this specific call and expose either a continued complex correction up from Jul’s 12.97 low OR expose a resumption of the Jan contract’s secular bull trend to new highs above 15.88, this market must recoup 13-Sep’s 14.98 high and key long-term bear risk parameter.  And if such a negation and count is what this market has in mind, then it now would be expected to sustain trendy, impulsive behavior higher above a level like yesterday’s 14.28 corrective low.

A short-term failure below 14.28 is not of a sufficient scale to conclude the end of the past month’s recovery from 06-Oct’s 13.62 low. Indeed, commensurately larger-degree weakness below at least former 14.23-to-14.07-area resistance-turned-support is required for this.  But against the backdrop of a unique and compelling and list of peak/reversal factors cited above, such admittedly smaller-degree weakness below 14.28 would defer or threaten the risk/reward metrics of a bullish count enough to warrant paring or neutralizing bullish exposure.

In sum and in effect, we believe this market has identified 14.28 and 14.98 as the key directional flexion points and risk parameters heading forward.  Traders are advised to toggle directional biases and exposure around these levels commensurate with their personal risk profiles (i.e. bullish for short-term traders with a failure below 14.28 negating this call, and bearish for long-term commercial players with a recovery above 14.98 negating this call).

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