RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

MAR E-MINI S&P

Overnight’s break below Tue’s 2695 low reaffirms the developing downtrend and leaves Tue’s 2885 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to stem the clear and present downtrend and expose at least a larger-degree correction back up and possibly a more protracted reversal.  Until and unless such 2885+ strength is shown, the trend remains down on all scales and should not surprise by its continuance or acceleration.  Per such, this 2885 level is considered our new short-term but, we believe, pivotal risk parameter.

Former 2700-area support is considered new near-term resistance.

The daily charts above and below shows the developing POTENTIAL for a bullish divergence in momentum, but this means absolutely nothing until and unless the market recovers above a prior corrective high like 2885 needed to CONFIRM the divergence to the point of non-bearish action.

There’s obviously been a lot of volatility lately and intra-day noise that shows this smaller-degree corrective high at 2885 in the same neighborhood as 28-Feb’s 2853 initial A- or 1st-Wave counter-trend low.  A recovery above this area could arguably jeopardize the impulsive integrity of a broader 5-wave Elliott sequence down that would be disastrous.  Per such, this “tighter” risk parameter at 2885 could have longer-term implications if the market could recover about it, making it, in our opinion this market’s most important technical level for the time being.

The daily log close-only chart below cleans out all of the intra-day noise and identifies Tie’s 2877 corrective high close as a pivotal level the bear needs to sustain losses below and the bull needs to recoup to suggest this extraordinary correction may be over.  Until this market recovers above 2885 on an intra-day basis and/or closes above 2877, the trend is down on all scales and should not surprise by its continuance or acceleration.

The weekly close (above) and monthly (below) log scale charts show the past three weeks’ meltdown VERY QUICKLY reaching the magnitude of ALL of the major corrections this market has experienced over the past 11 years and, understandably, generating the same type of historically bearish sentiment that has warned of and accompanied the ENDS of every one of these corrections.  TO BE CLEAR, we are NOT trying to bottom-pick here are create any type of “hope” for the market to bottom.  Indeed, it’s all about MOMENTUM now and the bear’s ability to sustain trendy, impulsive behavior below recent corrective highs like 2885.  But each and every previous end to a major correction started with that first smaller-degree bullish divergence in momentum needed to stem the downtrend and reject/define a more reliable low and support from which non-bearish decisions like short-covers and cautious bullish punts can only then be objectively based and managed.  Herein, we believe, lies the huge importance of Tue’s 2885 admittedly minor corrective high and short-term but pivotal risk parameter.

In sum, a bearish policy and exposure remain advised with a recovery above 2885 required to change the directional landscape, and potentially in a huge way.  Unfortunately, until and unless the market recoups this level, further and possibly steep losses remain expected.

JUN 10-Yr T-NOTES

Overnight’s recovery above a minor corrective high from yesterday at 138.19 confirms a bullish divergence in short-term momentum that defines yesterday’s 136.24 low as the END of this week’s corrective relapse attempt that’s consistent with the major bull trend and warns of its resumption.  The important by-product of this short-term mo failure is the market’s definition of that 136.24 low as the latest short-term but, we believe, key risk parameter from which traders can rebase and manage the risk of a still-advised bullish policy.

As we always discuss, trends typically slow down before they can reverse, and this typically takes the form of an interim (4th-wave or left-shoulder) corrective setback before a final (5th-wave or head) resumption of the trend that exhausts it before even creating the POTENTIAL for a bearish divergence in momentum.  We believe this is exactly what has transpired with this week’s dip to 136.24 ahead of the likely resumption of the bull.  What heights the resumed bull will reach are anyone’s guess.  But we’ll know precisely the level the bull needs to sustain gains above to remain intact.  And 136.24 will be that level and key risk parameter.

Basis actual 10-yr yields below, we believe this admittedly smaller-degree corrective high but key risk parameter is yesterday’s 0.852% corrective high close.

These issues considered, a full and aggressive bullish policy and exposure remain advised with a failure below 136.24 required to threaten this call enough to warrant its cover.  Until and unless such sub-136.24 weakness is proven, the secular bull trend remains intact to indeterminable heights.

DEC EURODOLLARS

The technical construct and expectations for the Dec Eurodollar market are virtually identical to those we detailed above in T-notes with Tue’s 99.47 low the latest corrective low and minimum level this market is required to fail below to even defer, let alone threaten the bull.  Per such, a bullish policy and exposure remain advised here as well with a failure below at least 9.47 required to pare or neutralize exposure.  The market’s upside potential remains indeterminable and potentially extreme.

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.