Reiterating our long-term stance discussed in 13-Aug’s Technical Webcast, we believe that:

  • historically bearish sentiment/contrary opinion conditions
  • the rejection (once again!) of the extreme lower recesses of the massive, multi-year lateral range and
  • the prospect that Jul-Ag’s decline completed a major wave sequence down

defines 07-Aug’s 3.20 low as a short-term but pivotal risk parameter from which a long-term base/reversal policy can be objectively based and managed.  Commensurately larger-degree strength above 01-Jul’s 3.63 next larger-degree corrective high remains required to, in fact, break 2019-2’s major downtrend and confirm the major reversal higher.

The market’s current position smack in the middle of these two obvious directional flexion points however presents poor risk/reward metrics from which to initiate directional exposure.  Rather, we advise traders to wait for and require a corn dip for a preferred risk/reward buy.

The hourly chart below details the recovery from 07-Aug’s 3.20 low.  It looks to be a pretty nice little 5-wave Elliott sequence as labeled.  It hasn’t failed yet below a minor corrective low at 3.36 from last Fri morning as such weakness is required to confirm a threatening bearish divergence in momentum needed to conclude a 5-wave-up completion.  But we suspect it’s coming.  Traders should not care one iota about our “suspicions”.  But the fact remains that current range-center levels present poor risk/reward merits, so there’s not a lot of choice.

Part of our rationale for waiting for and requiring such setback is that (B- or 2nd-wave) corrective rebuttals are typical of base/reversal-threat processes as well as our key third reversal requirement, and it’s clear from the hourly chart below that this market has yet to satisfy this requirement.  Additionally, gaps (up, in this case) so early in a reversal-threat situation are rather unusual to remain open, so we think there’ll be some sort of (B- or 2nd-Wave) downside to the 3.30-area (give-or-take) in the period ahead.

We will be watchful for a relapse-stemming bullish divergence in short-term momentum to reject/define a more reliable low and support from which the risk to an advised bullish exposure can be objective based and managed. And given the backdrop of a longer-term base/reversal-threat environment, the risk/reward merits of a bullish policy from that suspected/hopeful 3.30-area with risk to just below 3.20 could be extraordinary, capable f morphing into a long-term position. Please stay tuned; we believe this is going to be very interesting and opportunistic.

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