RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

MAR CRUDE OIL

While the 240-min chart below shows that the market established yet another new low for the past month’s collapse that should not surprise by its continuance, factors are mounting that suggest a more conservative approach to bear risk assumption “down here” is warranted.  As a result of yesterday’s latest spate of weakness, the market has left smaller- and larger-degree corrective highs in its wake at 51.55 and 54.37, respectively.  These risk parameters may come in handy given:

  • waning downside momentum on a short-term basis (the bull divergence of which would be confirmed on a recovery above 5155)
  • the prospect that the past week’s portion of the bear from 29-Jan’s 54.37 high is a 5-wave Elliott sequence as labeled)
  • the prospect that the decline from 29-Jan’s 54.37 high is the completing 5th-Wave of a broader Elliott sequence dating from 06-Jan’s 64.72 high as labeled in the daily log chart above
  • the return to a historically low 35% reading in the Bullish Consensus measure of market sentiment, and
  • the market’s quick, violent return to the (49-handle-area) lower-quarter of the past couple years’ range and six-month lows around 50.60.

Granted, by breaking last Jun’s 50.60 low, the market has exposed an area totally devoid of any technical levels of merit shy of Dec’18’s 42.36 low, so it’s free to free fall from here.  But for bearish risk/reward merits to remain favorable “down here”, it’s imperative that the market sustain trendy, impulsive behavior lower.  A recovery above an admittedly very, very tight risk parameter at 51.55 would be a smaller-degree threat against such a continued bearish count while commensurately larger-degree strength above 54,37 would certainly negate a bearish count and expose at least a larger-degree correction of Jan-Feb’s meltdown.

Finally, on an even broader, monthly log scale basis, the chart below shows the past month’s “big” move as little more than another hiccup within the middle-half bowels of its historical lateral range where such aimless hiccups are quite typical.  And from such range-center conditions where aimless whipsaw risk is more the norm than the exception, a more conservative approach to risk assumption is warranted.  Herein lies the importance of the tighter, more conservative levels to which we’ve advised trailing bear risk parameters.

These issues considered, a bearish policy remains advised ahead of what could be steep, even relentless losses straight away.  But given the threats to the bear listed above, we advise shorter-term traders with tighter risk profiles to consider yesterday’s 51.55 high as our new short-term risk parameter and longer-term players to neutralize bearish exposure on a recovery above 54.37.

MAR RBOB

The technical construct and expectations for the gas market are virtually identical to those detailed above in crude with 1.5054 and 1.5461 considered our new short- and longer-term risk parameters to a still-advised bearish policy and exposure.  In sum, a bearish policy remains advised with a recovery above 1.5054 required for shorter-term traders to step aside and commensurately larger-degree strength above 1.5461 for longer-term players to neutralize exposure.  In lieu of such strength, further losses 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.