Overnight’s break above last week’s 152.92 high reaffirms our interim bullish count introduced in 23-Jun’s Technical Blog and Mon’s 149.75 low in its wake as the latest smaller-degree corrective low this market now needs to sustain gains above to maintain a more immediate bullish count.  It’s failure to do so will confirm a bearish divergence in daily momentum, break the past month’s uptrend and expose at least a (B- or 2nd-Wave) correction of the rally from 16-Jun’s 140.67 low, and possibly re-expose the secular bear market.  And with the correlated Treasury and eurodollar markets flagging of late, traders are advised not to underestimate the bund market’s vulnerability following a failure below 149.75.  Per such, we’re identifying this 149.75 level as our new short-term but key risk parameter from which both shorter-term traders and longer-term institutional players are advised to rebase and manage the risk of an interim bullish policy and exposure.

On a broader scale, the daily chart above shows the clear and present developing recovery as well as the nicely developing POTENTIAL for a bearish divergence in momentum.  This potential will be CONFIRMED to the point of non-bullish action like long-covers and bearish punts if/when the market fails below 149.75 specifically.  Given the backdrop of the secular bear market shown in the weekly log active-continuation chart below in which the past month’s pop is easily considered a (4th-Wave) correction, even an admittedly smaller-degree momentum failure below 149.75 could re-expose the secular bear.  And the Fibonacci fact that this market has quickly retraced 38.2% of the suspected 3rd-Wave meltdown from Aug’21’s 177.61 high to 16-Jun’s 140.67 low would seem to reinforce at least an interim top if/when the market failed below 149.75.

These issues considered, a bullish policy and exposure remain advised with a failure below 149.75 required to not only neutralize this position immediately, but also to reverse into a cautious bearish position with protective buy-stops just above whatever high is left in the wake of such a sub-149.75 failure.  In lieu of such sub-149.75 weakness, further gains should not surprise.

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.