RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Today’s poke above last week’s 1.3174 high reaffirms our bullish count updated most recently in 22-Jul’s Technical Blog and leaves Tue’s 1.2984 low in its wake as the latest smaller-degree corrective low the market is now minimally required to fail below to confirm a bearish divergence in short-term momentum needed even defer our longer-term bullish count, let alone threaten it.  Per such, this 1.2984 low is considered our new short-term risk parameter from which traders can objectively rebase and manage the risk of a still-advised bullish policy.

This tight but objective risk parameter may come in handy as the market engages the upper-quarter of a 1.35-to-1.14-range that has constrained this market for the past TWO YEARS.  If there’s a time and place to keep a keen eye on some peak/reversal-threat vulnerability, it is here and now.  And we will start to judge such vulnerability initially with a failure below a corrective low like 1.2984.

This said, the uptrend is clear and present and impressive and should not surprise by its continuance or acceleration through 13Dec19’s obviously key 1.3510 high and resistance.  On a broader scale, commensurately larger-degree weakness below at least former 1.2800-to-1.2650-area resistance-turned-support in general and below 09-Jul’s 1.2674 (suspected minor 1st-Wave) high specifically is required to jeopardize the impulsive integrity of a broader bullish wave count and revert the market to the aimless lateral range black hole that has imprisoned it for two years.  But since even a longer-term bull risk parameter “down there” in the middle of a massive range isn’t very practical, even long-term players are advised to exchange whipsaw on an admittedly short-term mo failure below 1.2984 for deeper nominal risk below 1.2674.

Finally and compellingly relative to a continued bullish count, our proprietary RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC shows that this managed money community has been fading the past 4-1/2-MONTH uptrend all along.  Indeed, the current level of 35% is the lowest since last Oct amidst a major correction higher from 1.1965 to 1.3510.  This stubborn, short-and-wrong exposure warns us of not only continued upside vulnerability, but potentially sharp, sustained, even relentless gains straight away as the overall market forces the capitulation of these increasingly losing positions.

These issues considered, a bullish policy and exposure remain advised with a failure below 1.2984 required to pare or neutralize exposure commensurate with one’s personal risk profile.  In lieu of sch weakness, further and possibly accelerated gains straight away should not surprise.

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