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.

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.