RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


Soybeans Nov '19 60 Min Chart

Per long-term base/reversal factors we’ll address below, we’re approaching the relapse from 18-Jun’s 9.45 Globex day-session high as a corrective event that ultimately may provide an outstanding risk/reward buying opportunity for long-term players.  In such a corrective event we look for proof of labored, 3-wave behavior stemmed by a bullish divergence in momentum of an appropriate scale.  In the hourly chart above, 28-Jun’s 9.30 high remains intact as our short-term risk parameter we believe this market is minimally required to recoup to render the sell-off from 18-Jun’s 9.45 high a 3-wave and thus corrective affair from which we would then anticipate a resumption of a new major bull.  Needless to say, 18-Jun’s 9.45 high remains intact as THE key risk parameter the market needs to break to confirm the bull’s resumption.

On a very, very short-term basis however, yesterday’s recovery above 03-Jul’s 9.09 minor corrective high confirms a bullish divergence in momentum that, in fact, breaks the downtrend from 28-Jun’s 9.30 high.  We’re talking the important element of technical and trading SCALE here.  This mo failure is NOT of a scale that we can conclude the end of a correction from 9.45 and resumption of the major bull.  But what this tiny mo failure DOES provide is a more reliable low and support at 8.90 from which any non-bearish decisions like short-covers and cautious bullish punts or hedges can be objectively based and managed.

The benefits of such a smaller amount of risk, as always, come in direct exchange for whipsaw risk.  But heading into an unknown like this morning’s crop report (although this report isn’t supposed to be that big a deal like 28-Jul’s report or 12-Aug’s report), Tue’s 8.90 low provides a specific and objective risk parameter from which any non-bearish decisions can be objectively based and managed.  For end-users needing or wanting to protect against a 9.30+ surprise today, the risk of doing so is 8.90, below which the larger-degree (B- or 2nd-Wave) correction will be reaffirmed.

Soybeans Nov '19 Daily Chart

Soybeans Weekly Chart

From a long-term perspective, the weekly (above) and monthly (below) log scale charts show the technical facts on which our major base/reversal count is predicated:

  • a confirmed bullish divergence in MONTHLY momentum amidst
  • historically bearish sentiment/contrary opinion levels not seen since 2001!
  • the market’s failure to sustain May losses below the prior 3-1/2-YEARS of former support-turned-resistance
  • an arguably complete 5-wave Elliott sequence down from Sep’12’s 17.89 all-time high that
  • spanned a length with a couple percentage points of all three prior major bear moves dating back to the 197 – 2002 bear.

This is a powerful, unique and compelling list that we believe warns of a major, multi-year reversal of the 2012 – 2019 bear market until and unless negated by a relapse below 13-May’s 7.91 low.  In effect, we believe this market can see $11+ or $12+ levels before failing below 7.91.  A bullish divergence in momentum of a scale sufficient to conclude the end of the relapse from 18-Jun’s 9.45 high will provide a favorable risk/reward opportunity to position for such a bullish count.  Minimum strength above 9.30 s required at the moment to reinforce such a call.  But again, for traders willing to accept whipsaw risk in exchange for larger nominal risk, yesterday’s bullish divergence in very short-term momentum above 9.09 has identified Tue’s 8.90 low as an objective one from which to base such a punt.

These issues considered, an interim cautiously bearish policy remains advised with a recovery above 9.30 required to negate this call and resurrect a broader bullish count.  Shorter-term traders are also OK to consider cautious BULLISH exposure at-the-market (9.12) with a failure below 8.90 required to negate this call and warrant its immediate cover ahead of resumed correction that could extent to the 8.65-to-8.40-range in the ensuring weeks.

Soybeans Monthly Chart


Soybean Meal Dec '19 60 Min Chart

 The technical construct and expectations in Dec meal are identical to those detailed above in Nov beans with the key short-term and micro risk parameters and directional triggers at 324.5 and 310.5, respectively. In effect, traders can objectively toggle directional biases and exposure around this 324.5 – 310.5-range.

Soybean Meal Dec '19 Daily Chart

Soybean Meal Weekly Chart

Soybean Meal Monthly Chart

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