RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure yesterday to sustain recent losses below our short-term risk parameter defined by 16-Mar’s 50.14 corrective high in the now-prompt May contract confirms a bullish divergence in momentum that defines 22-Mar’s 47.01 low as the END of the decline from 21-Feb’s 55.03 high.  Per such 47.00 is considered our new key risk parameter from which all non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.

May Crude Light 240 min Chart


The market’s acknowledgement of this 47.00 level as at least interim support provides a more reliable low and risk parameter from which a larger-degree BASE/reversal count can be objectively rebased and managed.  For as relatively steep and deep as Feb-Mar’s plunge has been, the daily active-continuation chart below shows that it stopped in the immediate area of the (47.18) 61.8% retrace of Nov-Jan’s 42.20 – 55.24 rally.  COMBINED with the:

  • confirmed bullish divergence in mo that renders that “derived” Fib retrace as a relevant technical factor
  • textbook complete 5-wave Elliott sequence down from 21-Feb’s 55.03 high and
  • an arguably complete 3-wave relapse from 03-Jan’s 55.24 high

we can objectively resurrect a broader BULLISH count that suggests the entire 1Q17 erosion is a MERE CORRECTION within our long-term bullish count to levels potentially well above $55.00.

The 50-to-51-handle “area” that provided support for two solid months from 10-Jan until 08-Mar’s breakdown is acknowledged as a key new resistant hurdle.  IF something broader to the bear side lies ahead, we would expect any corrective recovery attempt to be constrained by the 51-handle with, ultimately, a relapse below 47.00 required to reaffirm such a bearish count.  Should this market start poking around the 52-handle, we believe this would reinforce the near-14-month bull trend and eventually expose new highs above 55.24.

Crude Light Daily Chart


Crude Light Weekly Chart

We would remind traders that the first-half of 2016’s recovery BROKE the secular bear trend from May’11’s 114.83 high and exposes a major correction or reversal higher.  The market has yet to provide the evidence on this major scale to negate this longer-term bullish count, with 1Q17’s relapse attempt no different thus far then both of the past two bull market corrections last Oct-Nov and Jun-Aug.  Combined with a historically low/bearish 28% reading last week in the Bullish Consensus (marketvane.net) measure of market sentiment, it’s not hard to find technical facts and conditions that are similar to those that have warned of and accompanied major uptrends in the past.  On this much broader scale a failure below Nov’16’s 42.20 long-term corrective low and risk parameter remains required to truly threaten a long-term bullish count.

These issues considered and after having bearish exposure negated by yesterday’s recovery above 50.14, traders are advised to return to a cautious bullish policy and first approach setback attempts as corrective buying opportunities.  As the market nears the middle of Feb-Mar’s 55.03 – 47.01-range the risk/reward merits of initiating directional exposure are poor.  Unless one is willing to risk a bullish act to 47.00, we will have to wait for corrective setback before specifying a preferred risk/reward buying recommendation.  This said, until the market proves weakness below 47.00, we believe it could surprise the world with further and possibly steep gains in the months ahead.

Crude Light Monthly Chart


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