RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Thur/Fri’s continuation of the reversal down from 04-Sep’s 135.45 high leaves 30-Sep’s 112.75 high in its wake as the latest smaller-degree corrective high in its wake that the market is now minimally required to recover above to arrest the clear and present, if intra-range downtrend and expose a corrective rebuttal of indeterminable scope.  Given the market’s reversion to the middle-half bowels of its past couple years’ range where the odds of aimless whipsaw risk are approached as higher, warranting a more conservative approach to risk assumption, traders are once again advised to trail protective buy-stops on shorts from 127.19 recommended in 14-Sep’s Trading Strategies Blog to levels just above 112.75.  In lieu of such 112.75+ strength however, the trend remains down on all practical scales and should not surprise by its continuance.

Contributing to the prospect of another range-center rebound that could be similar to Feb/Mar’s 97.40 – 130.65 spasm are waning downside momentum shown in the daily log chart above and the Fibonacci fact that the current decline from 04-Sep’s 135.45 high has spanned a length that is 61.8% (i.e. 0.618 progression) of Dec’19 – Jun’20’s preceding 142.45 – 94.55 decline on a weekly log basis below.  Neither of these facts matter however in the absence of actual PROOF of “non-weakness” with a recovery above 112.75.

Additionally and what could not only reinforce the downtrend, but accelerate it is the stubbornly bullish tack taken by the Managed Money community DESPITE a 22.5% plunge.  At a still-frothy 78% reading in our RJO Bullish Sentiment Index, this long-&-wrong position that warned of and accompanied early-Sep’s peak/reversal environment remains as fuel for further downside vulnerability.  Under this condition as well as the broader 87.60 – 142.45-range that has dominated price action for the past two years, a return to the lower-quarter (98-handle and below) of this range OR a resumption of the secular bear market that preceded it should hardly come as a surprise.

These issues considered, a bearish policy and exposure remain advised with a recovery above 112.75 required to even defer this call, let alone threaten it.  In lieu of such 112.75+ strength, further and possibly accelerated losses, even from “down here”, should not surprise.

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