RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

We introduced the prospect for a broader peak/reversal count in 26-Feb’s Technical Webcast following 25-Feb’s bearish divergence in short-term momentum.  Yet, despite weeks of price erosion, our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC actually went UP in last Fri’s report to a still-frothy 96% level reflecting a whopping 62K long positions to just 2.5K shorts as bulls stuck their necks out even further while bears trimmed exposure on Mar-10/11’s corrective hiccup.  Especially on the heels of:

  • a confirmed bearish divergence in momentum
  • an “outside day” the day of 25-Feb’s 95.60 high
  • an “outside WEEK” the week of 25-Feb’s 95.60 high
  • the growing likelihood that the entire rally from Apr’20’s 52.80 low to 25-Feb’s 95.60 high is a complete 5-wave Elliott sequence as labeled in the weekly log chart below, and
  • the market’s recent proximity to the massive 96-handle-area that has provided massive resistance for EIGHT YEARS
  • the highest (82%) Bullish Consensus (marketvane.net) reading in 10 YEARS,

we believe this stubborn long-&-wrong exposure provides fuel for potentially major downside vulnerability straight away and for what could be months or even quarters.

The daily (above) and 240-min (below) charts show continued heavy trading with the past week’s resumed slide identifying 11-Mar’s 88.56 high as the likely end or upper boundary of the correction up from 10-Mar’s 82.87 low.  We’re defining that 88.56 high as our new short-term risk parameter this market is now minimally required to recovery above to threaten our bearish count and perhaps render the sell-off attempt from 25-Feb’s 95.60 high as a 3-wave and thus corrective affair that might then re-expose the secular bull.  Until and unless the market recovers above at least 88.56, the decline from 01-Mar’s 92.80 high is arguably the dramatic 3rd-Wave down of a major correction or reversal lower that could expose sharp, sustained, even relentless losses straight away as the overall market forces the capitulation of the Managed Money community’s massive long-&-wrong exposure.

In sum, a bearish policy and exposure remain advised ahead of potentially steep losses with a recovery above 88.56 required to defer or threaten this call enough to warrant its 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.
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