RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

JUL CORN

Today’s clear break below Wed’s 7.92 minor corrective low and short-term risk parameter discussed in yesterday’s Technical Blog confirms a bearish divergence in short-term momentum.  This short-term mo failure is sufficient to conclude Wed’s 8.11 Globex day-session high as one of developing importance and a short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed by shorter-term traders with tighter risk profiles.  This mo failure is NOT of a sufficient scale to conclude anything more than a slightly larger-degree correction lower given the magnitude of the secular bull market.  Indeed, given the magnitude of the secular bull trend, commensurately larger-degree weakness below at least former 7.45-area resistance-turned-support and preferably below 29-Mar’s 6.95 larger-degree corrective low remains required to expose a major peak/reversal threat.

This brings into focus the key technical and trading issue of SCALE and basing trading decisions on one’s personal risk profile.  Today’s weakness is of a scale pertinent to shorter-term traders with tighter risk profiles, not commercial players and hedgers.  We cannot conclude a major peak/reversal threat following proof of just short-term weakness any more than we can conclude winning a $500 raffle with the purchase of a $1.00 ticket.

The daily (above) and weekly (below) log scale charts show the magnitude of the secular bull trend where the market remains $1.40 away from even former 7.45-area resistance-turned-support from Mar-Apr, let alone 29-Mar’s 6.95 larger-degree corrective low the market is required to break to break even the portion of the secular uptrend from Sep’21’s 5.13 low.  In effect, the short-term trend is down within the long-term trend that remains arguably up.

Now, as recently stated, every larger-degree momentum failure begins with a smaller-degree failure like today’s  Navigating this landscape requires adhering to technical and trading SCALE and risk assumption commensurate with one’s personal risk profile and abstaining from the conclusion that a major top has been formed after proof of just smaller-degree weakness.  Longer-term commercial players and hedgers are quite OK to pare bullish exposure to more conservative levels and/or initiate cautious bear hedges structured from now-established 8.11-area resistance.  HOWEVER, doing so fully acknowledges and accepts whipsaw risk back above 8.11 in exchange for deeper nominal risk below 7.45 or 6.95.  A recovery above 8.11 confirms the setback as another correction and reinstates the secular bull, exposing steep and potentially accelerated gains thereafter.

Admittedly, the combination of historically stratospheric sentiment/contrary opinion levels and the market’s proximity to 2012’s all-time high are tempting and acceptable elements to a major peak/reversal environment.  We know, without a shadow of a doubt that this historically-skewed bullish sentiment WILL lead to another peak/reversal motherlode similar to 2012.  But the market simply has not provided the longer-term evidence to conclude this massive bull has ended.  And until such evidence is provided, there’s no way to know this market isn’t going to blow away the 2012 high as soybean oil did with its prior 2008 high.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position to circumvent the depths unknown of a suspected slightly larger-degree correction within the still-unfolding secular bull trend.  We will be watchful for a relapse-stemming bullish divergence in short-term mo to reject/define a more reliable low and support from which the major bull might then resume and from which a resumed bullish policy can be objectively rebased and managed.  Longer-term players remain advised to maintain a bullish policy and exposure with a failure below at least 7.45 require to threaten this call and warrant paring or neutralizing exposure.  Longer-term players are OK to pare exposure to more conservative levels and/or establish cautious bear hedges, but this acknowledges and accepts a recovery above 8.11 negating this move and warranting its cover ahead of further and possibly steep gains thereafter.

DEC CORN

The technical construct and expectations for the Dec contract are identical to those detailed above in Jul following today’s short-term momentum failure below 7.36 and 7.24 that defines Mon’s 7.50 Globex day-session high as our new short-term risk parameter around which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.  We anticipate a slightly larger-degree correction lower within the still-arguable secular bull trend.  Commensurately larger-degree weakness below 29-Mar’s 6.31 larger-degree corrective low remains MINIMALLY required to threaten the secular bull trend, so this level remains intact as our key long-term bull risk parameter pertinent to longer-term commercial players.

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