RJO FuturesCast

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This morning’s break above 01-May’s 11.01 initial counter-trend high satisfies all three of our major base/reversal requirements introduced in 01-May’s Technical Blog, confirming early-May’s relapse attempt from 11.01 to 10.05 as a 3-wave and thus (B- or 2nd-Wave) correction within a major reversal process that dates from 28-Apr’s 9.21 low.  These 10.05 and 9.21 levels are confirmed as the latest smaller-degree corrective low and the arguable end of a textbook 5-wave Elliott sequence down from 12-Feb’s 15.90 high that now serve as our new short- and long-term risk parameters from which an aggressive bullish policy and exposure can be based and managed.  Until and unless stemmed by a bearish divergence in momentum, further and possibly steep, accelerated gains are anticipated straight away.

As discussed in recent updates, this major base/reversal count remains predicated on a unique and compelling combination of:

  • 01-May’s bullish divergence in daily momentum labeled in the daily log chart above
  • a complete 5-wave Elliott sequence down from 12-Feb’s 15.90 high
  • historically bearish sentiment levels Sep’19 and, before that, Oct 2001!
  • an “outside WEEK” the week of 28-Apr’s 9.21 low and
  • the markets gross failure to sustain new multi-year lows below the 9.90-to-10.13-area that supported the market since Aug’15.

While the market’s upside potential is indeterminable at this juncture, we believe recent historically bearish sentiment warns of tremendous upside vulnerability that should not be underestimated.  By contrast, we know precisely where the market needs to trade to threaten or negate this bullish call: initially below 10.05 and then certainly 9.21.  Until and unless such weakness is proven, steep, even relentless gains straight away should not surprise.

In sum, a full and aggressive bullish policy remains advised for all traders with a failure below at least 10.05 required to threaten this call and warrant defensive action.

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