RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

While the hourly chart below shows that the market has yet to break 18-Aug’s key 239.50 low needed to confirm a bearish divergence in daily momentum, the past couple days’ relapse makes the prior week-and-a-half’s recovery look like the excruciatingly labored 3-wave correction of all corrections, defining yesterday’s 249.75 high as a very tight but reliable level the market now needs to recoup to resuscitate a bullish count.  Until and unless such 250.00+ strength is shown, we’re identifying that 250.00 level as our new short-term risk parameter from which a newly advised bearish policy can be objectively based and managed.  Left unaltered by a recovery above 250.00, this 3-wave corrective recovery attempt warns of a resumption of mid-Aug’s downtrend that preceded it.  And once below 18-Aug’s 239.50 low, we don’t see anything capable of holding this market up.

The daily log scale chart above shows the nicely developing potential for a bearish divergence in momentum.  This indicator will be confirmed to the point of non-bullish action on a failure below 18-Aug’s 239.50 low.  And given the extent and uninterrupted nature of Jul-Aug’s uptrend, there is little to support this market once below 239.50 shy of former 2310-area resistance from early-May that serves as a support candidate.

The extent of Jul-Aug’s impressive rally certainly maintains the prospect that a sub-239.50 failure could “just” be a 4th-Wave correction ahead of a subsequent 5th-Wave resumption of the secular bull.  But we can only cross that bridge if/when the market arrests a sub-239.50 failure with a countering bullish divergence in momentum.  In lieu of such a bullish divergence in mo, the market’s downside potential below 239.50 is indeterminable and potentially severe.

Finally, we would remind traders of the market’s poke into the upper-quarter of its historical 14-year lateral range on a monthly log scale basis below.  If there’s a time and place to been keenly aware of a peak/reversal threat that could be major in scope, it is here and now.  And we believe a failure below 239.50 could expose such a reversal.  These issues considered, traders are advised to move to a new bearish policy and exposure at-the-market (243.00) with a recovery above 250.00 required to negate this specific count and warrant its immediate cover.  In lieu of such 250+ strength and especially following a break below 239.50, further and possibly steep losses are anticipated straight away.

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