RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s recovery yesterday above our short-term risk parameter defined by 23-Jun’s 4.93-1/4 corrective high confirms a bullish divergence in momentum.  This mo failure leaves Fri’s 4.71 low in its wake as THE END to a textbook 5-wave Elliott sequence down from 04-Jun’s 5.33 next larger-degree corrective high and thus a new short-term but KEY risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.

Stepping back, the daily chart below shows the past few days’ recovery thus far only retracing to an area of key former support from the 4.97-to-5.01-area between May and Mar that cannot be ignored as a new resistance candidate.  However, the textbook smaller-degree 5-wave Elliott sequence from 04-Jun’s 5.33 high is arguably the completing 5th-Wave of a textbook larger-degree sequence down from 31-Mar’s 5.70 high that, if correct, would warn of a larger-degree correction or reversal higher that could be relatively protracted.

Contributing to the prospect of a more extensive recovery from Fri’s 4.71 low is the return to relatively low, bearish levels in both our sentiment/contrary opinion indicators- the Bullish Consensus (marketvane.net) and our proprietary RJO Bullish Sentiment Index- shown in the weekly log chart below.  Additionally, the market’s recent and current position deep within the middle-half bowels of its massive lateral range warrants a more conservative approach to risk assumption due to the greater odds of aimless whipsaw risk typical of such range-center conditions.

These issues considered and while we concede that yesterday’s bullish divergence in momentum is of too small a scale to conclude a larger-degree recovery, the wave, sentiment and range-center elements are too conspicuous to ignore from a risk/reward perspective. Per such, both short- and longer-term traders are advised to neutralize previously recommended bearish exposure if they haven’t done so already and move to a new cautiously bullish policy until negated by a relapse below 4.71.  Setback attempts to the 4.85-to-4.81-range are advised to first be approached as corrective buying opportunities ahead of a suspected reversal to the 5.20-to-5.30-area or higher and a relapse below 4.71 required to negate this call and warrant its immediate cover.

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.