Yesterday’s continued uptrend above 04-Sep’s 318.2 high reaffirms our bullish count introduced in 13-Aug’s Technical Webcast and leaves Tue’s 313.6 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to confirm a bearish divergence in short-term momentum and even defer the bull, let alone threaten it.  Per such, this 313.6 level is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bullish policy and exposure.  This admittedly tight but objective risk parameter may come in handy ahead of tomorrow’s key crop reports.

From a longer-term perspective given the magnitude of what is now a 3-month, $40 rally, clearly, a failure below such a smaller-degree risk parameter like 313.6 would be of a grossly insufficient SCALE to conclude anything more than another interim corrective hiccup.  Indeed, looking at the daily chart above, commensurately larger-degree weakness below at least former 309-to-306-area resistance-turned-support and preferably below 17-Aug’s 305.8 suspected 1st-Wave high is required to jeopardize the impulsive integrity of a broader base/reversal count that warns of potentially huge gains in the weeks and months ahead.

From an even longer-term perspective shown in the weekly log chart below, over three months ago we introduced in 04-Jun’s Technical Blog the factors like:

  • the market’s proximity to the lower-quarter of its massive, multi-year lateral range that has repelled all previous sell-off attempts
  • historically bearish sentiment levels and
  • waning downside momentum

that warned of another base/reversal-threat environment that could be major in scope.  The past quarter’s rally obviously confirms this bullish count.  The challenge now however is in determining its remaining scope.  Will the 325-area that has capped the past couple years’ recovery attempts cap this one as well?  Or is the bull on a tangent to the 380+ upper-quarter of the massive 4-1/2-YEAR lateral range?

We would submit that if the latter, very bullish count is what the market has in store, then the rally from 10-Aug’s 286.2 low is a dramatic 3rd-Wave that is “extending”.  This count would be characterized by steep, sustained, trendy, impulsive-to-the-point-of-being-quite-obvious strength straight away.  An admittedly short-term mo failure below our short-term risk parameter at 313.6 would not negate such a bullish count, but it’d be the first strike against it.  Subsequent and commensurately larger-degree weakness below 305.8 would be inconsistent with such a bullish count enough and tilt longer-term directional scales enough to warrant even long-term players to neutralize bullish exposure.  With tomorrow’s key crop reports having the potential to move this market sharply either way, we may get the answer sooner rather than later.

In sum, the trend remains up on all scales and should not surprise by its continuance or acceleration warranting a continued bullish policy and exposure.  A failure below 313.6 is a sufficient deferral or threat to this cal for shorter-term traders to take profits and move to the sidelines.  Commensurately larger-degree weakness below 305.8 is required to threaten a bullish count on a long-term basis sufficient for long-term players to neutralize exposure.

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