RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure overnight below 13-Apr’s 136.26 minor corrective low, our short-term risk parameter and area of former resistance-turned-support discussed in 14-Apr’s Technical Webcast confirms a bearish divergence in short-term momentum.  This mo failure defines 14-Apr’s 144.78 high as one of developing importance, the end of the uptrend from at least 11-Apr’s 130.25 larger-degree corrective low and our new short-term risk parameter from which non-bullish decisions can be objectively based and managed by shorter-term traders with tighter risk profiles.

From a longer-term perspective, commensurately larger-degree weakness below 11-Apr’s 130.25 next larger-degree corrective low and our key longer-term risk parameter remains required to conclude the end of a textbook 50-wave Elliott sequence up from 08-Mar’s 112.07 low labeled in the daily log chart above.  But even then, the market would still be above key former resistance-turned-support from Feb’s 129-handle-area shown in the weekly log chart below.  Per such, it would be premature to conclude anything more than a slightly larger-degree bull market correction as a result of overnight’s bearish divergence in short-term momentum.

This said and acknowledging that we cannot conclude a broader peak/reversal threat from proof of only short-term weakness, traders are reminded that every larger-degree momentum failure begins with exactly the type of smaller-degree mo failure this market has confirmed overnight.  And with market sentiment/contrary opinion levels still at stratospheric levels, even longer-term commercial players are advised to increase their awareness of a possible peak/reversal threat that could be major in scope.  A larger-degree momentum failure below 130.25 would be the next reinforcing step in such a count.

Finally and from a very long-term perspective, it’s interesting to note not only the market’s recent engagement of the upper-quarter of its massive historical range where almost any bearish divergence in momentum is hard to ignore as the start of a major peak/reversal threat, but also this month’s 144.78 high coming within a smidge of the 146.11 level that makes the rally from Apr’20’s 48.35 low 61.8% of the length of 2008 – 2011’s previous major bull market from 36.70 to 219.70 on a log scale basis.  This Fibonacci fact means nothing without an accompanying confirmed bearish divergence in momentum below at least 130.25 and preferably Mar’s 115.37 major corrective low needed to break the secular bull trend.  But it’s worth acknowledging its inclusion in a basket of peak/reversal-threat elements if/when this market proves commensurately larger-degree weakness below 130.25.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position with a recovery above 144.78 required to negate this call, reinstate the bull and expose potentially steep gains thereafter.  Longer-term commercial players are advised to pare bullish exposure to more conservative levels and jettison remaining exposure on a failure below 130.25 that would break the uptrend from at least 08-Mar’s 112.07 low and expose a correction or reversal lower of indeterminable but potentially major scope.  In effect, we believe this market has identified 130.25 and 144.78 as the key directional flexion points heading forward and around which directional biases and exposure can be objectively toggled commensurate with one’s personal risk profile.

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