RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The past couple days’ break below last week’s 98.76 low reaffirms the major bear trend and leaves Mon’s 98.88 high in its wake as the latest smaller degree corrective high this market is now minimally required to recoup to even defer, let alone threaten a bearish count and policy.  Per such, this 98.88 level serves as our new short-term risk parameter from which shorter-term traders with tighter risk profile can objectively rebase and manage the risk of a still-advised bearish policy and exposure.

On a longer-term basis, only a glance at the daily (above) and weekly (below) charts is needed to see that the major downtrend remains as the dominant technical factor.  The trend is down on all scales and is expected to continue as part of a new secular bear market that we believe, along with interest rates in general, can be generational in scope.  On this longer-term basis, commensurately larger-degree strength above at least a massive area of former support-turned-resistance around the 99.12-to-99.16-area is required to threaten a long-term bearish count.

Finally, as the short end of the curve continues to melt down while the longer end has stagnated, the weekly close-only chart of the 2-yr-to-10-yr Treasury spread below reflects this performance.  This spread has been flattening for the past seven months but remains 100 basis points away from that flat yield curve danger zone that would be a major warning flag of equity market vulnerability that could be major in scope.  Just something to keep in the backs of our minds and continue to monitor in the months ahead.

In sum, a bearish policy and exposure remain advised in the Jun23 Eurodollar market with a recovery above 98.88 required for shorter-term traders to move to a neutral/sideline position temporarily in order to circumvent the heights unknown of what we’d believe at that point to be just a slightly larger-degree bear market correction.  Commensurately larger-degree strength above 99.16 OR from broader basing behavior that could span weeks is required for longer-term institutional players to follow suit.  In lieu of strength above at least 98.88, further and possibly steep losses remain expected.

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