RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Fri’s continuation of the major bull above Thur’s 3.95 high leaves Thur’s 3.86 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.  It’s failure to do so will confirm a bearish divergence in short-term momentum and break the uptrend from 28-Sep’s 3.60 next larger-degree corrective low.  Per such, shorter-term traders with tighter risk profiles are advised to use 3.86 as their new short-term risk parameter from which to rebase and manage the risk of a still-advised bullish policy and exposure.

From a longer-term perspective, clearly, such smaller-degree weakness below 3.86 would be grossly insufficient to conclude anything more than another interim corrective hiccup within this year’s major reversal and our major base/reversal count introduced in 13-Aug’s Technical Webcast.  Indeed, commensurately larger-degree weakness below 28-Sep’s 3.60 next larger-degree corrective low remains required to, in fact, break the 2-month uptrend.  Per such, that 3.60 level continues to serve as our long-term risk parameter from which longer-term commercial accounts can objectively base and manage a still-advised bullish policy and exposure.

These short- and longer-term risk parameters will certainly come in handy given a few threats to the bull, including:

  • the market’s general position deep within the middle-half bowels of its massive SIX YEAR lateral range where the odds of aimless whipsaw risk are considered higher
  • the understandable return to historically frothy levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC
  • today’s 3.99 high that is the exact 61.8% retrace of 2019-20’s entire 4.68 – 3.09 decline on a weekly log scale basis below and the neighboring
  • today’s 3.99 high that’s just a penny away from the (4.00) 0.618 progression of Waves-1-thru-3 (3.20 to 3.79) taken from 28-Sep’s 4th-Wave low of 3.60 labeled in the daily log scale chart above.

This is an interesting and compelling list of factors that means nothing until and unless the market provides the evidence needed to even defer, let alone threaten the clear and present and major uptrend.  Herein lies the importance of identifying bull risk parameters like 3.60 and even 3.86, the failures below which will defer and then negate the bull.  When the market was dawdling around the extreme lower-recesses of the massive, multi-year lateral range around 3.40 and below, we required the bear to “perform” below specific corrective highs and key risk parameters.  The bear’s failure to do so contributed to our major base/reversal count that remains intact currently.  Now, the same technical discipline applies, only inverted.  To maintain a bullish policy “up here”, the bull needs to sustain its performance above the noted levels to remain, well, a bull.

In sum, a bullish policy and exposure remain advised with a failure below 3.86 required for shorter-term traders to neutralize exposure and circumvent the depths unknown of a correction or reversal lower. Longer-term players are advised to maintain a bullish policy withy a failure below at least 05-Oct’s 3.77 intermediate-degree corrective low required to pare exposure to more conservative levels and commensurately larger-degree weakness below 3.60 to negate this specific bullish count altogether and warrant a move to the sidelines. Until and unless such weakness is proven, further and possibly accelerated gains should not surprise.

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