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S&P Bull Pressures Upper-Range, Defines New S-T Risk

Posted 10/15/2019 1:19PM CT | RJO Market Insights

Today’s continued strength above last week’s 2994 high reaffirms our bullish count updated in Fri’s Technical Blog and leaves yesterday’s 2953 low in its wake as the latest smaller-degree corrective low the market is required to fail below to confirm a bearish divergence in short-term momentum, stem the rally and expose another intra-range corrective setback.  In lieu of such sub-2953 weakness, at least the intermediate-term trend remains up and should not surprise by its continuance or acceleration.  In this regard this 2953 level serves as our new short-term risk parameter for a still-advised bullish policy and exposure.

This tight but objective risk parameter at 2953 may come in handy given the market’s proximity to the extreme upper recesses of the past quarter’s range shown in the daily chart above and weekly log chart below.  If there’s a time and place for this market to fail once again, it is here and now.  And we will gauge such a failure initially with a bearish divergence in short-term mo below 2953.

Until and unless at least such sub-2953 weakness is proven however, traders are reminded of the unique combination of historically bearish sentiment/contrary opinion levels despite the market’s close proximity to all-time highs.  Additionally and as we just updated in soybean oil, the labored, worrisome,  frustrating, “rising-wedge” manner in which the market has rallied since early-Jun typically means either waning upside momentum ahead of a peak/reversal OR a sort of “coiling-up” before the trend goes ballistic.  Indeed, it’s not hard at all to picture sharp, accelerated gains up at new all-time highs when the grossly bearishly-skewed huddled masses are forced to chase bullish exposure up at increasingly higher and less efficient risk/reward heights that will only serve to fuel the move even more.  If such a bullish forecast is either wrong or deferred until a later date, the market will have to first fail below 2953.  This will provide an effective time and place to pare or neutralize bullish exposure.

In sum, a full and aggressive bullish policy and exposure remain advise with a failure below 2953 required for shorter-term traders to step aside and for longer-term players to pare exposure to more conservative levels ahead of another intra-range setback.  Until and unless such weakness is shown, further gains remain expected with a break above the past quarter’s 3026-to-303-area range potentially opening the spigot to accelerated and sustained gains immediately thereafter.

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