RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The extent and impulsiveness of today’s continuation of yesterday’s recovery above yesterday’s 2889 initial counter-trend high confirms a bullish divergence in short-term momentum that obviously confirms at least the intermediate-term trend as up.  This rebound leaves smaller- and larger-degree corrective lows in its wake at 2823 and 2776, respectively, that now serve as our new short- and longer-term risk parameters from which both shorter-term traders and longer-term players can objectively rebase and manage the risk of a resumed or continued bullish policy.

On the next larger scale, the market remains a good distance away from 26-Jul’s 3030 high that it obviously is required to recoup to mitigate any peak/correction/reversal and reinstate the secular bull trend.  And again, as we mentioned is yesterday’s update, market sentiment/contrary opinion levels are nowhere near the frothy levels that typify broader peak/reversal-threat conditions.  They are consistent with the ends of bull market corrections ahead of resumptions of the those trends at hand.  So today’s continuation of this week’s recovery is encouraging for longer-term bulls.

Wanting/needing to play the devil’s (bear’s) advocate however, the most important by-product of today’s rally is the definition of specific and objective risk levels at 2823 and 2776 from which we can now rebase and manage bullish policy and exposure.  IF IF IF this week’s rebound is a (B- or 2nd-Wave) correction within a major peak/reversal environment, then we can objectively act on the basis following PROOF of weakness below these thresholds.  Until and unless such weakness is proven, Tue’s 2776 low could have ended the latest correction within the secular bull ahead of that bull’s resumption to new highs above 3030.

These issues considered, long-term players remain advised to maintain a bullish policy with a failure below 2823 required to pare exposure to more conservative levels and subsequent weakness below 2776 to jettison the position altogether ahead of a correction or reversal lower that could be extensive.  Shorter-term traders whipsawed out of bullish exposure are advised to return to a cautious bullish policy from 2925 OB with a failure below a very minor corrective low at 2881 required to threaten this call enough to warrant its cover.  In lieu of such weakness, further and possibly accelerated gains should not surprise.

RJOF Editorial Team