RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

While commensurately larger-degree weakness below 14-Jul’s 11.27 larger-degree corrective low remains required to, in fact, break Apr-Aug’s broader uptrend, we believe the extent, impulsiveness and decisiveness with which this market demolished our short-term risk parameter defined by 10-Aug’s 12.41 corrective low and key area of former resistance-turned-support warns of exactly such a broader peak/reversal environment.  On a smaller scale, this week’s resumed slide leaves 28-Aug’s 12.84 high in its wake as the latest smaller-degree corrective high the market is now minimally required to recover above to threaten a broader peak/reversal count.  Per such, this 12.84 level becomes our new short-term but key risk parameter from which  non-bullish decisions like long-covers and new bearish punts can be objectively based and managed.

Stepping back, the daily chart above shows today’s break below an area of former resistance around 12.32-to-12.27 that, since broken in late-Jul, should have held as new support if the market was still truly strong.  The market’s failure to sustain 12.25+ levels is not necessarily the death knell to our bullish count introduced in 30-Apr’s Technical Blog, however:

  • the market confirmed a bearish divergence in daily momentum that defines 14-Aug’s 13.28 high as one of developing importance and
  • the prospective high to a textbook 5-wave Elliott sequence up from 28-Apr’s 9.21 low amidst a
  • historically frothy (87%) level in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC (its highest reading since Feb’17) and
  • a recovery that came within six ticks of the (13.34) 61.8% retrace of Feb-Apr’s 15.90 – 9.21 meltdown on a weekly linear scale below.

These incriminating issues considered and given the impracticality of a larger-degree risk parameter at 11.27 back in the middle of Apr-Aug’s range, both short- and long-term traders are advised to neutralize all previously recommended bullish exposure if they haven’t done so already and first approach recovery attempts to 12.25 OB as corrective selling opportunities ahead of what we believe will be a more protracted correction of Apr-Aug’s rally that could span weeks or even months and to levels below 11.00.  A recovery above at least 12.84 is required to threaten this call and warrant moving back to the sidelines.

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