RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday afternoon and overnight’s clear, impulsive rally above the 2636-area that provided recent resistance reaffirms our base/correction/reversal count introduced in 25-Mar’s Technical Blog.  This resumed strength leaves 02-Apr’s 2425 low in its wake as the latest smaller-degree corrective low the market is now required to sustain gains above to maintain a more immediate bullish count.  Per such, this 2425 level becomes our new short-term risk parameter from which a resumed bullish policy and exposure can be objectively rebased and managed.

Former 2635-area resistance would be expected to provide new near-term support ahead of further gains.

As encouraging as the past couple days’ strength is however, from a longer-term perspective there remain many hurdles for the bull before we can breathe easy.  Indeed, the extent and 5-wave-looking impulsiveness of Feb-Mar’s break below Dec’18’s 2317 major corrective low breaks the secular bull trend.  Commensurately larger-degree strength above 20-Feb’s 3398 obviously key high and secular bear risk level remains required to mitigate any major peak/reversal count and reinstate the secular bull market.

What lies between spot prices today and that 3398 high in the days and weeks to come, we believe, will provide some of the most important price action and implications since Feb-Apr 1930 and Apr-May 2008.  In each of those cases, the encouraging recoveries proved to be only corrections of the preceding INITIAL counter-trend decline that ended up resuming in major, catastrophic ways thereafter.  For the current condition to avoid such a bearish count, the current bull just needs to keep on keepin’ on, avoiding any bearish divergences in momentum.  A bearish divergence that stems this rebound, especially around the (2865-area) 61.8% retrace of Feb-Mar’s 3398 – 2174 collapse on a daily log scale basis above would be the first threat against the bull and reinforcing evidence of a bearish count that no one wants to consider.

We will certainly cross that bridge if/when the market gets us to that point and condition.  For then time being however, at least the intermediate-term trend is up and is expected to continue with a failure below 2425 required to negate this call and re-expose a major bear trend.  We will keep a keen eye on MOMENTUM in the days and weeks ahead that is so crucial to the bull’s survival.

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