RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

DEC CORN

In Fri’s Technical Webcast, we discussed last Wed’s 5.93 low as the short-term risk parameter the market needed to sustain gains above to maintain a more i9mmediate bullish count, especially so close to the extreme upper recesses of the past month’s range.  The hourly chart below shows this morning’s failure below 5.93, confirming a bearish divergence in short-term momentum that defines Thur’s 6.28-1/4 high as one of developing importance and possibly the end of the uptrend from 26-May’s 5.00 pivotal low.  Given larger-degree peak/reversal-threat elements we’ll discuss below, this 4.28-1/4- level serves as a short-term but key risk parameter from which non-bullish decisions like long-covers, cautious bearish punts and bear hedges can be objectively based and managed.

Until and unless the market recoups 4.28-1/4, we anticipate at least a continuation of the past month’s major correction/consolidation that could include a return to its lower-quarter OR a broader peak/reversal process that, if correct, warns of a major break below 26-May’s pivotal 5.00 low.  Needless to say, a break above 07-May’s 6.38 high remains required to confirm the price action from that high as corrective, reinstate the secular bull and expose potentially steep gains thereafter.

On a broader scale, the fact that today’s momentum failure occurred so close to 07-May’s 6.38 high, especially given historically frothy bullish sentiment, questions the short-to-intermediate-term risk/reward merits of a continued bullish policy “up here” and warns of at least another intra-range relapse that could easily be .50-to-.70-cents.  To negate this prospect, the market has to recoup 6.28-1/4.

On an even larger-scale shown in the weekly log active-continuation chart below (that’s still reflecting Jul prices), a relapse below 26-May’s 5.00 low in the dec contract is required to raise the odds of a major reversal lower given months of waning upside momentum and the understandably historically frothy sentiment/contrary opinion levels not seen since 2012’s infamous peak and reversal.  Long-term commercial players have to acknowledge the commensurately larger-degree flexion points at 6.38 and 5.00 as those that this market much break to either reinstate the secular bull or confirm a major reversal lower.  What the market has in store for us between these boundaries is anyone guess.  This could include MONTHS of aimless, lateral, consolidative chop ahead of a resumption of the secular bull or a massive reversal of an 11-month bull trend to levels well below 5.00.

These issues considered, both short- and longer-term traders are advised to move to a neutral-to-cautiously-bearish policy and first approach recovery attempts to 5.93 OB as corrective selling/hedging opportunities ahead of further lateral-to-lower prices of indeterminable scope in the weeks ahead.  A recovery above 6.28-1/4 is required to negate this specific call and warrant its immediate cover ahead of further and possibly protracted gains thereafter.

NOV SOYBEANS

Similarly, this morning’s failure below 03-Jun’s 13.97 low and short-term risk parameter discussed in Fri’s Technical Blog confirms a bearish divergence in short-term momentum that defines 07-Jun’s 14.72 high as the END of the uptrend from 26-May’s 13.25-3/4 low and new short-term risk parameter from which non-bullish decisions like long-covers and new bearish punts can be objectively based and managed.

This short-term but objective high and risk parameter at 14.72 could come in handy given the prospect that, on a long-term basis, the rally from 26-May’s 13.25 low may be the completing 5th-Wave of a massive Elliott sequence from Apr’20’s 8.26 low in the Nov contract as labeled in the daily (above) and weekly (below) log scale charts.  Historically frothy bullish sentiment and months of waning upside momentum are complicit in this major peak/reversal-threat count.

Given the magnitude of the secular bull, it is equally easy to consider the past week’s setback as just another corrective hiccup ahead of further and possibly steep, accelerated gains above 14.72.  So while we cannot conclude a broader peak/reversal count until commensurately larger-degree weakness is proven below 13.25, we can also require a recovery above 14.72 to mitigate the peak/reversal threat and reinstate the bull.  In effect, the short-term trend is down within the longer-term trend that is still arguably up, but with elements threatening it.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position.  We will be watchful for labored, corrective behavior on a recovery attempt to the 14.25-to-14.30-area in the days or week ahead AND another bearish divergence in short-term momentum to present a favorable risk/reward selling opportunity.  Longer-term commercial players are advised to pare bullish exposure to more conservative levels and jettison remaining exposure on a failure below 13.25.  Producers are advised to consider cautious bear hedge positions until nullified by a recovery above 14.72 and to add more aggressively to this hedge on a sub-13.25 failure.

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