RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure this morning below our short-term risk parameter at 2375 confirms a bearish divergence in momentum that defines yesterday’s 2405 high as the END of the rally from at least 17-Apr’s 2323 low.  As a result, this 2405 high serves as our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.

The 240-min chart below also shows a gap resulting from 24-Apr’s higher open that is now likely to be closed as today’s mo failure mitigates the prospect for any more immediate and broader impulsive move higher.  This reduces the odds that that gap is a “break-away” gap as opposed to a “common” gap that is typically “closed” in the course of lateral, choppy, trading-range behavior.

Emini 240 min Chart

Emini Daily Chart

The daily log scale chart above shows the bearish divergence in momentum that identifies yesterday’s 2405 high as one of developing importance.  As for the market’s downside potential, 17-Apr’s 2323 next larger-degree corrective low and key risk parameter becomes the obvious next key downside threshold, the break of which is required to break the uptrend from 04Nov16’s 2079 orthodox low and expose a major correction of Nov’16 – May’17’s 2079 – 2405 rally.

As a result of at least a shorter-term momentum failure the historically frothy 69% reading in the Bullish Consensus (marketvane.net) measure of market sentiment becomes an applicable technical factor that warns of larger-degree downside vulnerability.  This will particularly be the case if the market confirms a bearish divergence in WEEKLY momentum with a failure below 2323.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position on the failure below 2375 and are next advised to approach recovery attempts to the 2390 level OB as corrective selling opportunities with a recovery above 2405 required to negate this call and resurrect the secular bull.  Longer-term players are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 2323.

Emini Weekly Chart

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.