RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Nov 29, 2022, 08:46 by Dave Toth

In 14-Nov’s Technical Blog we discussed some short-term weakness and vulnerability that, from the middle-half bowels of this year’s broader range, still required commensurately larger-degree weakness below the 14.23-to-14.07-area of former resistance-turned-support to expose a more protracted bearish count.  By virtue of yesterday’s clear recovery above 22-Nov’s 14.44 initial counter-trend high shown in the hourly chart below, the market has not only confirmed a bullish divergence in short-term momentum, but also rendered mid-Nov’s sell-off attempt a 3-wave and thus corrective structure that now warns of at least a resumption of Oct-Nov’s intra-range uptrend to new highs above 07-Nov’s 14.69 high.  This hourly chart also shows the market holding former 14.23-to-14.07-area resistance as new support, reinforcing and resurrecting an interim bullish count.

As a result of yesterday’s rally, the market has identified smaller-degree corrective lows at 14.28 and 14.07 that it would fully be expected to sustain trendy, impulsive gains above per a more immediate bullish count.  These levels serve as our new mini and short-term parameters from which the risk of any bullish exposure can be objectively based and managed.  While tight, these risk parameters are objective and effective, especially from the middle-half bowels of this year’s range where the odds of aimless whipsaw risk remain high, warranting a more conservative approach to risk assumption.

The daily bar chart above and close-only chart below show the market’s position still deep within the middle-half bowels of this year’s massive lateral range where the odds of aimless whipsaw risk remain high.  While the intra-range trend has flipped the script to up, within such lateral environments it should be incumbent on any suspected or prospective bull to BEHAVE LIKE ONE with sustained, trendy, impulsive behavior to the upside to initiate and maintain even an interim bullish policy and exposure.  Herein lies the importance of our two smaller-degree corrective lows and risk parameters identified above.

A key question now for the bull is its ability to take out 13-Sep’s 14.98 Globex day-session high and/or 12-Sep’s 14.90 high close as part of either a continuation of what we believe is a major 2nd-wave CORRECTION of Jun-Jul’s initial (1st-Wave) decline within a massive PEAK/reversal process from the Jun high OR a resumption of the secular bull trend to new highs above 09-Jun’s 1588 high.  Long-term traders are reminded the extent and 5-wave impulsiveness of Jun-Jul’s decline and bearish divergence in weekly momentum amidst historically frothy bullish sentiment maintains a major peak/reversal process until and unless negated by a recovery above Jun’s 15.88 high.

IF IF IF the secular bull trend is resuming, then it is incumbent on the bull to blow away both the 14.98 and 15.88 highs in trendy, impulsive fashion.  A poke above 14.98, to the upper-quarter of this year’s range that is followed by a rally-stemming bearish divergence in momentum will do nothing but reinforce this year’s major peak/reversal process.

On an even longer-term basis, the weekly (above) and monthly (below) show:

  • Jun’s bearish divergence in weekly momentum amidst
  • historically extreme bullish sentiment/contrary opinion levels
  • an arguably complete and massive 5-wave Elliott sequence from May’19’s 7.91 low and
  • the rejection of the extreme upper recesses of this market’s historical range.

The arguable peak/reversal=threat price action that began with May’21’s 16.68 high remains comparatively identical to 2011-2012’s massive top that, as with most reversal processes, includes an often times “extensive” 2nd-wave or right-shoulder corrective rebound within the process.  This 2nd-Wave corrective rebuttal is what we believe has been unfolding from 22-Ju’s 12.97 low.

These issues considered, shorter-term traders are advised to move to an interim and cautious bullish policy and stance with a failure below 14.28 required to threaten this call enough to warrant its cover.  Longer-term commercial players remain advised to maintain a bearish policy with a recovery above 14.98 required to negate this specific all and warrant its cover.  In effect, we believe this market has identified 14.98 and 14.07 as the key directional flexion points heading forward.

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