Today’s clear, impulsive break below 02-Dec’s 381.0 initial counter-trend low is the next reinforcing step to a potentially major peak/reversal count we introduced in 03-Dec’s Technical Blog.  This resumed weakness leaves 03-Dec’s 391.0 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter the market is now minimally required to recoup to threaten a bearish count, possibly render the sell-off attempt from 25-Nov’s 400 high a 3-wave and thus corrective affair and re-expose this year’s major bull.  Until and unless such 391+ strength is shown, and especially if the market breaks the pivotal 375-to-373.8-area, further and possibly steep, protracted losses should not surprise.

As recently discussed, the unique and compelling factors that contribute to a major peak/reversal threat include:

  • the nicely-developing potential for a bearish divergence in daily momentum (above)
    • confirmed on an intra-day break below 02-Nov’s 373.8 larger-degree corrective low and/or a close below that day’s 375.1 low close shown below
  • the prospect that the market has completed a major 5-wave Elliott sequence up from late-May’s lows as labeled above and below
  • historically frothy bullish sentiment/contrary opinion levels not seen since at least Jun’18 and, in the case of the Bullish Consensus (, since Jun 2014!
  • the market’s proximity to and rejection thus far of the upper-quarter of its massive FIVE YEAR range shown in the weekly log chart below.

This is a unique, compelling and opportunistic list of peak/reversal factors that are, quite frankly, TYPICAL of major peak/reversal-threat environments we see time and time again across all markets and market sectors.  As is typically the case, the huddled masses have their bullish necks sticking out in a major way.  Such bullishness is quite appropriate, until the market breaks the uptrend with a confirmed bearish divergence in momentum, the combination of which leaves the market vulnerable to potentially steep losses as the bulls capitulate.

These issues considered, a bearish policy and exposure remain advised for shorter-term traders with a recovery above 391 required to threaten this call enough to warrant its cover.  Longer-term players have been advised to pare bullish exposure to more conservative levels and neutralize remaining exposure and reverse into a bearish policy on a close below 375 and/or an intra-day break below 373.8.  The market’s downside potential below 373.8 is indeterminable and potentially severe.

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.