Overnight’s relapse below 16-Jun’s 18.45 low, short-term risk parameter and area that has provided support for the past MONTH chalks up the recent pop to Tue’s 19.11 high as the correction we suspected it was and reinstates the downtrend from 17-May’s 20.29 high.  Per such, this 19.11 level serves as our new short-term but key risk parameter from which a resumed bearish policy and exposure can be objectively rebased and managed.  Traders whipsawed out of bearish exposure by last week’s bullish divergence in short-term mo are advised to reinstate shorts from at-the-market (18.33 OB) with a recovery above 19.11 required to negate this specific call and warrant its cover.

On a broader scale and while today’s resumed break reinforces at least the intermediate-term downtrend, both the daily chart above and weekly log active-continuation chart below show this market still well within the bounds of the incessant range that has encapsulated it since last Oct.  Another return to its lower-quarter could pose another intra-range rebound.  By the same token however, and especially given historically frothy levels in our RJO Bullish Sentiment Index, there’s no way at this juncture to know that the decline from either 17-May’s 20.29 high or 13-Apr’s 20.50 high isn’t the dramatic 3rd-Wave of a massive peak/reversal environment that’s poised to blow 03-Feb’s 17.46 low away.  THIS bearish count is the prospective one worth playing for from the bear side currently with a risk to 19.11.

These issues considered, traders are advised to return to a bearish policy and exposure at-the-market (18.33 OB) with a recovery above 19.11 required to negate this call and warrant its cover.  In lieu of such strength, further and possibly protracted losses straight away are anticipated.