RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

On the heels of a bearish divergence in admittedly short-term momentum discussed in 08-Sep’s Technical Webcast, today’s relapse leaves a mere retest of 04-Sep’s 135.40 high in its wake as a prospective (B- or 2nd-Wave) correction within a peak/reversal threat that could be relatively major in scope.  Per such, we’re identifying that 135.45 high as our new short-term risk parameter from which traders can base non-bullish decisions like long-covers and new bearish punts.

This said, a break below 08-Sep’s 127.20 initial counter-trend low remains minimally required to confirm even the intermediate-term trend as down and threaten Jun-Sep’s broader, impressive uptrend.  However, ancillary evidence including:

  • the market’s proximity to the upper-quarter of the past couple years’ range amidst
  • an historically frothy (85%) reading in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC and
  • an arguably complete 5-wave Elliott sequence up from 15-Jun’s 94.55 low

is compelling and complicit in a peak/reversal-threat environment that would warn of at least a major correction of a 2-1/2-month, 40-cent rally that could easily revert the market back to the (110-to-115) middle-half bowels of the 2-year range.

These issues considered, traders are advised to neutralize all previously recommended bullish exposure and move to a new bearish policy and exposure on the immediate break below 127.20.  a subsequent recovery above at least Fri’s 132.55 corrective high and certainly 04-Sep’s 135.45 high is required to threaten and then negate this new bearish policy and warrant its cover.  In lieu of such strength, we believe this is a favorable risk/reward opportunity from the bear side that could produce relatively steep losses in the weeks and perhaps months ahead.

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