RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

In 17-Dec’s Technical Blog when the major reversal from 06-Oct’s 6.557 high resumed, we discussed the increased odds of aimless whipsaw risk resulting from the market’s return to the middle-half bowels of its massive multi-year range amidst waning downside momentum.  The 240-min chart above and daily log chart below show today’s poke above the past month’s 4.04-area resistance after a month’s worth of aimless chop that reinforces 29-Dec’s the bullish divergence in short-term momentum discussed in that day’s Technical Blog and reaffirms at least the intermediate-term uptrend.

Given the magnitude and impulsiveness of Oct-Dec’s downtrend, the past month’s lateral-to-higher price action remains well within the bounds of a correction within the broader bear trend.  But for range-center-threat reasons that prompted a more conservative approach to bear risk exposure, pared or neutralized exposure helps traders reduce or eliminate the risk of the heights unknown of a suspected correction within what we believe is only the early stage of a major, multi-quarter move south.

Today’s further recovery obviously reinforces 23-Dec’s 3.518 low as one of developing importance and our short-term but key risk parameter the market now needs to break to reinstate and resurrect the major bear trend.  Today’s spike also identified Fri’s 3.800 low as another smaller-degree corrective low the market is now required to sustain gains above to maintain a more immediate bullish count.  If the market’s got a more protracted, if intra-range move higher in mind, it must sustain levels above 3.800.  Its failure to do so will render the past few weeks’ recovery attempt another 3-wave and thus corrective affair that would then re-expose the major bear.  Per such, this 3.800 level serves as our new mini risk parameter from which the risk of non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

On a much broader basis, the weekly (above) and monthly (below) log scale charts show the extent and impulsiveness of the sell-off thus far from Oct’s 6.466 high that we believe presents the same type of major peak/reversal elements that warned of and accompanied Nov’18 and Feb’14’s major peak/reversal environments.  This major bearish count does not mean however that this market won’t incur corrective rebounds that might be extensive and volatile, especially from the middle-half bowels of the massive lateral range that arguably dates back to 2009.

These issues considered, a neutral-to-cautiously-bullish policy remains advised with a failure below 3.800 flipping the script back to the bear side ahead of a resumption of the major downtrend.  In lieu of such sub-3.80 weakness, further lateral-to-higher prices remain expected.

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