RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

As a result of the past couple days’ rebound, the technical construct and expectations for the Jun contract are similar to those in the Feb contract updated in 10-Jan’s Technical Blog.  Waning downside momentum at the lower recesses of the past month-and-a-half’s range along with what looks like a clear 3-wave and thus corrective relapse from 02-Jan’s 90.17 high to Mon’s 84.77 low labeled in the hourly chart below reinforces 03-Dec’s 83.92 low as key support and also identifies Mon’s 84.77 low as one of developing importance and potentially the end of a (B- or 2nd-Wave) correction within a broader base/correction/reversal threat from our the early-Dec low.  Per such, this 84.7 level serves as our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

A recovery above 08-Jan’s 87.97 high remains required to CONFIRM early-Jan’s relapse attempt as a 3-wave and thus corrective affair and expose at least a return to the upper recesses of the recent range.  But for the reasons cited above and sentiment/contrary opinion reasons we’ll discuss below, we believe current lower-87-handle-area prices present favorable risk/reward merits from which to base bullish action with a relapse below 84.77 required to negate this call.

Longer-term players are reminded that that the past month-and-a-half’s mere lateral chop follows Oct-Dec’s 3-wave, 61.8% retrace of Aug-Oct’s impressive rally.  Left unaltered by a relapse below 83.92 and our long-term risk parameter, this 3-wave setback is considered a corrective/consolidative affair that warns of a resumption of Aug-Oct’s uptrend that preceded it.  This week’s rejection of the lower recesses of the recent range following another 3-wave and thus corrective sell-off attempt in early-Jan poises the market for another rebound or rally that could surprise in scope.

A generally bullish approach is also reinforced by the still-historically-low sentiment/contrary opinion levels shown in the weekly log chart below.  If this market is “vulnerable” to a move one way or the other, the low/bearish levels in the Bullish Consensus (marketvane.net) and our proprietary RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC suggest such a vulnerability would be to the upside.

If there’s fly in the ointment, its the Jun contract’s position still deep within the middle of the middle-half bowels of the past year’s lateral range where the odds of continued aimless whipsaw risk are advised to be considered higher.  Nonetheless, we take comfort in the fact that this market has rejected/defined/reinforced support from the 84.77-to-83.92-range that serves as an excellent and objective risk parameter to any bullish decisions.

These issues considered, a bullish policy and exposure remain advised for long-term players with a failure below 83.92 required to negate this cal and warrant its cover.  Shorter-term traders whipsawed out of bullish exposure following 03-Jan’s bearish divergence in short-term momentum are advised to return to a bullish policy from 87.30 OB and/or on a breakout above 87.97 with a failure below 84.77 required to negate this call and warrant its cover.  In lieu of such weakness, we anticipate at least a recovery to the 89/90-area upper recesses of the recent range, if not a bust-out above it ahead of an assault on last year’s 94-handle-area highs.

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