RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

In Wed’s Technical Webcast we identified 19-May’s 1041.6 as a pivotal level and long-term bull risk parameter the market needed to sustain gains above to maintain a broader bullish count that contended the sell-off attempt from 29-Apr’s 1128 high is a 3-wave, corrective/consolidative affair ahead of an eventual resumption of the secular bull market.  Today’s clear break below this level not only negates such a bullish count, but also exposes a peak/correction/reversal count that could be major in scope.

The hourly chart of day-session prices below shows that as a direct result of this latest spate of weakness, the market has defined smaller- and larger-degree corrective highs at 1084 and 1117.9 that this market is now required to recoup to threaten and then negate a bearish count that could see protracted 3rd-wave-type losses straight away.  Per such, these levels serve as our new short- and long-term risk parameters from which non-bullish decisions like long-covers and new bearish punts can be objectively based and managed.

Now-former 1041-area support, since broken, s considered new near-term resistance ahead of further and possibly steep losses.

On a broader scale, today’s clear break below 19-May’s 1041.6 day-session low confirms a bearish divergence in daily momentum (above).  This now reinforces the arguable bearish divergence in WEEKLY momentum (below), most of which was merely due to the roll from the Jul to Nov contract last week.  Combined with the prospect that 17-May’s 1219 high in the then-prompt Jul contract completed a major 5-wave Elliott sequence from at least Jun’21’s 656 low and possibly a massive sequence from May’19’s 427 ow, the extent of the market’s downside vulnerability is indeterminable and potentially severe.

Indeed, the extent and uninterrupted nature of this year’s portion of the bull in the Nov contract above left nothing in the way of former consolidative battlegrounds that might now be looked to for support.  In effect, there’s nothing to hold this market up.  By sharp contrast, the market has identified specific levels and risk parameter at 1084 and especially 1117.9 that it must now prove strength above to mitigate a broader bearish count.  Until and unless such strength is shown, further and possibly protracted, even relentless losses straight away should not surprise.

These issues considered, all previous bullish policy and recommendation have been nullified, warranting a move to at least a neutral if not cautiously bearish policy and exposure with a recovery above at least 1084 required to defer or threaten this call enough to warrant defensive action.  In lieu of such strength, further and possibly protracted losses straight away are expected.

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