RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

On the smallest of scales detailed in the hourly chart below, Fri’s slip below a very minor Globex day-session corrective low at 450.0 from 08-Feb confirms a bearish divergence in momentum. This admittedly minor mo failure is, of course, of a scale too small to conclude the end of a massive $156.7, 49% explosion from 13Oct21’s 318.2 low.  But it IS sufficient to conclude last week’s 474.9 high as one of developing importance and, at this early juncture, a mini risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.  And for some distinct Elliott and Fibonacci reasons we’ll discuss below, even longer-term commercial players may want to take note.

Stepping back a bit, in the daily log chart above and hourly chart (top), late-last-week’s and overnight’s setback is arguably not even enough to conclude the end of the portion of the spectacular rally from 24-Jan’s 386.3 low, let alone the 4-month monster rally.  Indeed, commensurately larger-degree weakness below at least 02-Feb’s 429,3 corrective low and short-term risk parameter remains arguably required to conclude the end of this portion of the bull.  HOWEVER…..

…In both the daily log scale bar chart above and daily log close-only chart below, the prospect that the rally from last Oct’s lows is a complete 5-wave Elliott sequence is clear.  And on the close-only basis below, the suspected 5th-Wave up from 18-Jan’s 388.7 corrective low came within .40-cents of the (460.3) 0.618 progression of the net distance of Waves-1-thru-3 (320.2 – 420.9)!  COMBINED with historically frothy sentiment/contrary opinion levels AND the market’s proximity to the extreme upper recesses of its massive, multi-year historical range, we believe the risk/reward metrics of maintaining a bullish policy “up here” have become questionable enough to warrant paring or neutralizing recently advised bullish policy and exposure.

The weekly (above() and monthly (below) log scale charts clearly show the market’s position at the upper-quarter of its historical lateral range that dates back at least 10 years and that has repelled every other bullish assault.  And with a stratospheric 9% reading in our RJO Bullish Sentiment Index reflecting a whopping 96K Managed Money long positions reportable to the CFTC versus a piddly 8K shorts, there is plenty of fuel for downside vulnerability when the overall market forces the capitulation of this historically bullishly-skewed exposure.

These issues considered, we advised all but the longest-term commercial players to move to a neutral/sideline position at current levels, with a recovery above 475.0 required to negate this call, reinstate the bull and warrant a return to a cautious bullish stance.  Long-term players remaining in a bullish stance are only advised to do so to the extent that they’re comfortable with and accept the risk to at least 02-Feb’s 429.3 corrective low.

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