RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Sep 13, 2022, 08:35 by Dave Toth

The 240-min chart below shows the market’s sharp failure this morning below a minor corrective low at 4080 from yesterday that confirms a bearish divergence in short-term momentum and defines today’s 4175 high as the END of the (suspected 2nd-Wave corrective) recovery attempt from 07-Sep’s 3883 low.  The Fibonacci fact that this momentum failure stems from the immediate area of the (4158) 61.8% retrace of Aug-Sep’s 4328 – 3883 decline is consistent with our long-term bearish count discussed in Fri’s Technical Blog that contends the past week’s recovery attempt is another correction within a major bear market.

As a direct result of today’s admittedly short-term momentum failure and within the context of this year’s multi-quarter peak/reversal behavior, today’s 4175 high is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a resumed bearish policy and exposure.

Stepping back, it’s important to understand the context of today’s bearish divergence in admittedly short-term momentum WITHIN this year’s major peak/reversal environment that includes these bearish factors:

  • bearish divergences in long-term weekly and monthly momentum
  • historically frothy sentiment/contrary opinion early this year
  • the extent and 5-wave impulsiveness of Jan-Jun’s decline that suggests it is only an INITIAL A- or 1st-Wave of a major correction or reversal lower that’s got more to go
  • Jun-Aug’s 3-wave, 61.8% correction. 

This remains a unique and compelling list of peak/reversal-threat facts that warn of a potentially massive move lower in the quarters ahead, akin to the 2007 – 2009 bear market.  Against this peak/reversal backdrop, an absolute top priority is to identify the RISK PARAMETERS this market is required to recoup to threaten or negate this major bearish count.  Following 24-Aug’s bearish divergence in daily momentum that stemmed Jun-Ag’s 61.8% corrective retrace, we identified 16-Aug’s 4328 high as the suspected end/top to a 2nd-Wave correction within this massive bearish count and THE KEY bear risk parameter the market needed to recoup to negate our specific bearish count.  Now, after today’s bearish divergence in short-term momentum, we’re identifying today’s 4175 high as yet another, shorter-term bear risk parameter from which a bearish policy and exposure can be objectively rebased and managed.

These issues considered, a bearish policy and exposure remain advised for longer-term institutional traders and investors with a recovery above 4175 required to pare exposure to more conservative levels and commensurately larger-degree strength above 4328 to neutralize remaining exposure ahead of what could be protracted gains thereafter.  Shorter-term traders with tighter risk profiles who might have pared or neutralize bearish exposure following Fri’s bullish divergence in short-term momentum are advised t return to a bearish policy and exposure at-the-market (4045-area) with a recovery above 4175 required to negate this call and warrant its cover.  In lieu of a recovery above at least 4175, further and possibly protracted losses are anticipated in the period ahead, including a resumption of Aug-Sep’s downtrend to new lows below 3883 that would reinforce our count for a resumption of the secular bear market to new lows below Jun’s 3639 low.

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.