RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Nov 10, 2022, 09:31 by Dave Toth

Today’s decisive impulsive break below 03-Nov’s 414.0 initial counter-trend low not only confirms a bearish divergence in daily momentum we’ll address below, but also reinforces a peak/reversal count that could be major in scope given still-frothy bullish sentiment levels in our RJO Bullish Sentiment Index.  From a short-term basis detailed in the hourly chart below, today’s weakness leaves smaller- and larger-degree corrective highs in its wake at 423.3 and 429.8 basis Globex day-session prices that this market would be expected to sustain trendy losses below per our broader bearish count.  Per such, these levels serve as our new short- and long-term risk parameters from which traders can objectively base non-bullish decisions like long-covers and continued or new bearish policies.

On a broader scale, by breaking 03-Nov’s 414.0 initial counter-trend intra-day low and that day’s 414.3 initial low close, the market has confirmed a bearish divergence in DAILY momentum shown in the high-low chart above and close-only chart below.  This weakness renders Oct’s entire recovery attempt as a 3-wave affair as labeled.  Left unaltered by a recovery above 429.8 n an intra-day basis or on a close above 427.1, this 3-wave recovery is a considered a (2nd-Wave) correction within a broader peak/correction/reversal process from 22-Sep’s 443.8 intra-day high and 21-Sep’s 438.1 high daily close.  If correct, this count calls for a (C- or 3rd-Wave) resumption of Sep-Oct’s initial counter-trend decline to new and potentially major lows below early-Oct’s lows around 392.

Contributing to this broader peak/reversal count is the fact that our RJO Bullish Sentiment Index shows the Managed Money community still with its neck skewed dramatically to the bull side with 104K longs reportable to the CFTC versus only 11K shorts for a 91% reading in the Index.  COMBINED with today’s bearish divergence in momentum, this extensive bullish exposure is considered fuel for downside vulnerability that could be significant.

These issues considered, a bearish policy and exposure remain advised for longer-term commercial players with a recovery above 429.8 required to negate this call and warrant its cover.  Shorter-term traders with tighter risk profiles are advised to neutralize cautious bullish exposure and approach bounces back to the 410-to-415-range as corrective selling opportunities with a recovery above 423.3 required to negate this specific call and warrant its cover.  In lieu of strength above at least 423.3, further and possibly protracted losses straight away should not surprise.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.