RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Nov 04, 2022, 08:53 by Dave Toth

With yesterday’s slip below 21-Oct’s 1621.1 low, this market has posted a new intra-day low for the entire 27-MONTH bear from Aug’20’s 2089 all-time high.  The initial takeaway from the resumed major bear market is the market’s definition of 26-Oct’s 1679.4 high as the resulting and latest smaller-degree corrective high this market is now minimally required to recover above to mitigate a more immediate bearish count and at least resurrect further lateral correction/consolidation within the long-term downtrend.  Per such, this 1679.4 level remains intact as our short-term bear risk parameter from which shorter-term traders can objectively base and manage a continued bearish policy and exposure.

The next takeaway is this market’s gross inability to SUSTAIN this weakness, at least on a short-term basis.

This short-term “non-weakness” is getting harder to ignore following identical behavior two weeks ago when the market broke 28-Sep’s 1622.2 low by a piddly dollar before recovering relatively smartly to that 1679.4 high shown in the daily log chart above.  Given NEW LOWS for not only this year’s major downtrend, but a declining market for the past 27 months and where there are NO levels below the market of any technical pertinence, the supposed secular bear trend should be accelerating and taking no prisoners.

Rather, the daily charts above and below show downside momentum that’s been dying on the vine for the past month.  On a daily log close-only basis below, 28-Sep’s 1629.3 remains intact as developing support and a level this market must now close below to reaffirm the major bear.

This said and as a result of yesterday’s break to another new low, the market is minimally required to recover above 26-Oct’s 1679.4 high to confirm a bullish divergence in even short0-term momentum, let alone threaten the secular bear trend.  To confirm the bullish divergence in DAILY momentum sufficient to break this year’s major downtrend, commensurately larger-degree strength above 04-Oct’s 1738.7 larger-degree corrective high remains required.

The reason we bring up the bear’s LACK of punishing downside performance “down here” when it has every opportunity in the world to do so after reaffirming the secular bear trend below Mar’21’s low back in mid-Sep is that 1) the market remains in the immediate neighborhood of the (1653.5) 1.000 progression of Aug’20 – Mar’21’s initial 2046 – 1698 decline taken from 11Mar22’s 1992 high amidst 2) historically bearish sentiment/contrary opinion levels shown in the weekly log close-only chart above.  IF IF IF the entire sell-off from Aug’20’s 2046 high weekly close is a 3-wave correction within a still-unfolding secular BULL market from 2015’s 1045 low, then this combination of waning downside momentum, Fibonacci relationship and historically bearish sentiment levels is exactly the technical condition and factors we would expect.

While the short-term resilience with which this market has thus far held up is one thing, what matters with respect to a broader BASE/correction/reversal count is proof of commensurately larger-degree strength specifically above 04-Oct’s 1738.7 larger-degree corrective high.  Until and unless such strength is proven, the secular bear trend remains, in fact, down and should hardly surprise by its continuance and eventual collapse.  Short-term strength above 1679.4 will not negate this long-term bearish count, but it COULD be the start of the requisite strength above 1738.7 that could flip the directional script totally.  Both short- and long-term traders are urged to acknowledge and be flexible to a pivotal technical situation currently that could have long-term implications, understanding and adhering to technical and trading SCALE as a crucial element to navigating either a major bear market correction or major base/reversal environment.

These issues considered, traders are advised to move to a more conservative bearish policy and exposure with a recovery above 1679.4 sufficient for shorter-term traders to move to a neutral/sideline position with commensurately larger-degree strength above 1738.7 required for longer-term commercial players to follow suit.  In lieu of such strength, a continuation of the 27-month bear trend should not surprise.

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