This morning’s failure below Thur’s 1611 initial counter-trend low confirms a bearish divergence in momentum that defines 25-Mar’s 1699.3 high as the end of the recovery from 16-Mar’s 1450.9 low and leaves yesterday’s 1673.6 high in its wake as the latest smaller-degree corrective high the market is now required to recover above to arrest the relapse, render it a 3-wave and thus corrective affair and re-expose the bull.  In this regard, this 1673.6 level is considered our new short-term risk parameter from which non-bullish decisions like long-covers and new bearish punts can be objectively based and managed.

The fact that this momentum failure stems from the extreme upper recesses of this month’s range contributes to at least an interim, intra-range reversion to its middle-half and possibly a return to its lower recesses or a more protracted peak/reversal.  After all, the same peak/reversal factors that warned of early-to-mid-Mar’s relapse remain in place:

• the prospect that the major rally from Aug’18’s 1167 low is a complete 5-wave Elliott sequence
• a bearish divergence in momentum that has, in fact, broken the major uptrend and
• historically frothy market sentiment/contrary opinion levels.

In fact, a whopping 99% reading in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC is the highest since June 2011.

These issues considered, traders are advised to move to a cautious bearish policy and exposure from current 1613.5-area levels OB with a recovery above 1673.6 required to negate this specific call and warrant its cover.  In lieu of such 1673.6+ strength, further and possibly steep losses are expected.