RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

In 20-Feb’s Technical Blog we discussed a bearish divergence in momentum that broke the portion of the major bull from 29-Jan’s 2702 low, establishing 07-Feb’s 2935 high as one of developing importance and a short-term risk parameter from which shorter-term traders with tighter risk profiles could objectively base non-bullish decisions like long-covers and cautious bearish punts.  But this mo failure was not of a sufficient scale to threaten the uptrend from 23-Dec’s next larger-degree corrective low at 2388 low, let alone the major bull from Oct’18’s 1982 low.

Over the past week-and-a-half however, the market has taken the next larger-degree peak/reversal step by breaking 29-Jan’s 2702 longer-term risk parameter.  This allows us to conclude 07-Feb’s 2935 high as THE END of the rally from AT LEAST 23-Dec’s 2388 low and quite possibly the secular 28-month advance from 1982.

On a short-term basis, the past couple days’ continued slide leaves Thur’s 2758 high in its wake as the latest smaller-degree corrective high that we’re considering our new short-term risk parameter from which shorter-term traders can objectively rebase and manage the risk of non-bullish decisions like long-covers and cautious bearish punts.

Factors contributing mightily to this major peak/reversal count include:

  • the market’s rejection of Apr’18’s 2943 high shown in the weekly log chart above
  • the market’s rejection (again) of the upper-quarter of the past FOUR YEAR range shown in the monthly log chart below and
  • historically frothy sentiment/contrary opinion levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC.

COMBINED with a bearish divergence in daily momentum that identifies 07-Feb’s 2935 high as a specific and objective risk parameter, these factors warn of a peak/correction/reversal threat that could be major in scope.  Per such, a cautious bearish policy remains advised for short-term traders with a recovery above at least 2758 required to defer or threaten this call and warrant defensive measures.  Long-term players have been advised to neutralize any/all bullish exposure on Fri’s failure below 2702 and are further advised to establish at least a cautious bearish policy at-the-market )2635 OB) with a recovery above 2758 required to neutralize exposure for a preferred risk/reward sale on a retest of 07-Feb’s 2935 high.  In lieu of strength above at least 2758 and preferably 2935, further and possibly accelerated losses straight away should not surprise.

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