Posted on Dec 08, 2022, 06:56 by Dave Toth

Yesterday’s break above last Fri’s 114.285 high reaffirms our base/correction/reversal count introduced in 10-Nov’s Technical Webcast and leaves Mon’s 113.25 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to even defer, let alone threaten what has become an increasingly sizeable and impressive month-and-a-half-long recovery.  Per such, this 113.25 level serves as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bullish policy and exposure.  Reinforcing this level, the 240-min chart below also shows this 113.27-to-113.19-area to be a key one of former resistance-turned-support.

On a broader scale, the daily chart of the contract (above) shows this market retracing nearly half of Aug-Oct’s entire 122.02 – 108.265 plunge.  The trend is clearly up on this daily scale, but given the backdrop of a 26-month secular bear trend and the developing potential for a bearish divergence in momentum, we cannot ignore the still-long-term-bearish prospect that the recovery from 21-Oct’s 108.265 low is just a slightly larger-degree bear market correction.

A short-term mo failure below 113.25 would not be of a sufficient scale to conclude the end of this 7-week rally.  Indeed, commensurately larger-degree weakness below 27-Oct’s 111.31 suspected 1st-Wave high is now required to jeopardize the impulsive integrity of a broader and more immediate bullish count, render this recovery a 3-wave and thus corrective affair and re-expose the secular bear.  Per such, this 111.31 level is considered our new long-term bull risk parameter pertinent to longer-term institutional players.

From an inverted 10-yr yield basis below, the analogous short- and long-term bear risk parameters cut across at 3.612% and 3.896%, respectively.

Finally and from an even longer-term perspective, the weekly chart of the contract below shows this recovery stemming not only from the lowest Bullish Consensus ( level on record, but also from an arguably complete and massive 5-wave Elliott sequence down from Aug’20’s 140.13 high.  If correct, the base/correction/reversal of this 26-month, 380-bp bear market could span quarters or even more than a year.  And if we’re in the early stages of such a recovery, the market would not only be expected to sustain trendy, impulsive behavior up above levels like 111.31 and even 113.25, but to accelerate higher straight away.

These issues considered, a bullish policy and exposure remain advised with a failure below 113.25 required for shorter-term traders to neutralize exposure and commensurately larger-degree weakness below 111.31 for longer-term institutional players to follow suit.  In lieu of such weakness, further and possibly accelerated gains are anticipated.

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