RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The extent and impulsiveness of today’s relative obliteration of MONTH’S worth of support around the 138.18 may be a warning of a lot more than just the definition of Mon’s 139.075 high as the latest smaller-degree corrective high and new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively based and managed.  They could be a warning of a peak/reversal count that would be major in scope.

On a broader scale, it’s old news that upside momentum has been waning for the past TWO MONTHS.  Today’s clear break below levels that has supported this market since mid-Apr in general, and below 06-May’s 138.08 initial counter-trend low specifically, confirms a bearish divergence in momentum that defines 21-Apr’s 139.22 high as THE END of the uptrend from at least 19-Mar’s 133.21 low.  At most, the rally from 19-Mar’s 133.21 low to 21-Apr’s 139.22 high may be completing 5th-Wave of a gigantic 5-wave Elliott sequence from 08Oct18’s 117.135 low ahead of a correction or reversal lower that would be major in scope.

If a broader bearish count is not at hand, suggesting today’s relapse is part of a slightly larger-degree bull market correction, then all the bull’s gotta do now is start recouping levels like 139.08.  Until and unless such strength is proven, and especially given historically frothy sentiment not seen since that that warned of and accompanied Jul’16’s major peak and reversal, we believe further and possibly protracted, sustained losses should not surprise straight away.

These issues considered, all previously recommended bullish policy and exposure is advised to be neutralized if it hasn’t been done so already as a result of today’s failure below 138.18.  Additionally, traders are advised to move to a new bearish policy and first approach recovery attempts to 138.12 OB as corrective selling opportunities with a recovery above 139.08 negating this call and warranting its cover ahead of a then-prospective resumption of the secular bull.  Until and unless such 139.08+ strength is proven, further and possibly sustained, protracted losses should not surprise.

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