RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure Thur below 29-Mar’s 121.90 corrective low confirms a bearish divergence in short-term momentum.  This mo failure defines Thur’s 127.32 high as the END of the rally from at least 07-Mar’s 109.15 larger-degree corrective low, exposing at least a larger-degree correction lower and possibly the start of a more protracted peak/reversal process.  As a result, last week’s 127.32 high is considered our new short-term risk parameter from which traders can objectively base non-bullish decisions like long-covers and cautious bearish punts.

From a longer-term perspective however, the past few days’ setback and short-term mo failure is of an insufficient SCALE to conclude anything more than a larger-degree correction within the still-unfolding secular bull trend.  Indeed, commensurately larger-degree weakness below 07-Mar’s 109.15 larger-degree corrective low remains required to break the uptrend from last Sep’s 87.00 low that, along with historically skewed levels in our RJO Bullish Sentiment Index, would expose a peak/reversal threat that could be massive in scope.  In effect, we have a situation in which the short-to-intermediate-term trend is down within the still-arguable long-term bull trend.  This predicament highlights the crucial matter of technical and trading SCALE and traders’ need to adhere to risk assumption commensurate with their personal risk profiles.

For what it’s worth, from an Elliott Wave perspective, we believe that last week’s 127.32 high might have only completed the major 3rd-Wave up from Sep’21’s 87.00 low as labeled in the weekly log chart below.  If correct, this count warns of what could be a relatively protracted 4th-Wave correction that could span weeks ahead of an eventual and final 5th-Wave resumption of the bull to one more high above 127.32.  Proof of 3-wave, corrective behavior AND a relapse-stemming bullish divergence in momentum are now required to identify the end of lower boundary to this suspected correction.  In lieu of these requirements being satisfied, further lateral-to-lower prices are anticipated in the period ahead with a recovery above 127.32 required to confirm this count and reinstate the bull.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position in order to circumvent the depths unknown of this correction or reversal lower.  Longer-term commercial players are advised to pare bullish exposure to more conservative levels and acknowledge and accept whipsaw risk, back above 127.32, for deeper nominal risk below 109.15.  A break below 109.15 would warrant covering remaining bullish exposure ahead of a major reversal threat at that point.

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.
For more information on RJO Market Insights, contact your broker or RJO representative.