Yesterday’s clear, impulsive relapse below both 19-Mar’s 700.1 initial counter-trend low and 26-Feb’s pivotal 692.5 larger-degree corrective low and key long-term risk parameter confirms the bearish divergence in daily momentum that threatens the secular bull market and confirms our peak/reversal count introduced in 17-Mar’s Technical Blog following that day’s short-term mo failure below 730. The hourly chart below shows that yesterday’s latest stint of weakness leaves Mon’s 719.7 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to threaten a more immediate bearish count and perhaps render the sell-off attempt from 09-Mar’s 760.4 high a 3-wave and thus (major 4th-Wave) corrective affair that might then lead to a (5th-Wave) resumption of the secular bull. Until and unless this market can recoup at least 719.7, there’s no way to know that the resumed slide from 23-Mar’s 750.4 high isn’t the dramatic 3rd-Wave of an eventual and major 5-wave Elliott sequence down to oblivion.
The daily chart above shows the confirmed bearish divergence in momentum that, in fact, breaks the major uptrend and defines 09-Mar’s 760.4 day-session high as THE high and resistance that this market obviously needs to recoup to reinstate the major bull and confirm this month’s setback as a major correction. Until strength above at least 719.7 and preferably 760.4 is proven however, there’s really no way to know that that 760.4 high didn’t complete a major 5-wave Elliott sequence up from May’19’s 427 low as labeled in the weekly log chart below. And amidst waning upside momentum on this broader weekly basis and what must be as stratospherically, multi-year frothy sentiment levels as those in play in soybean oil, it’d be foolish to ignore these clear and major peak/reversal-threat elements.
Now, this said, one would be hard pressed to find such a major reversal PROCESS that didn’t include an often times extensive- in terms of both price and time- (B- or 2nd-wave or right-shoulder) corrective rebuttal to such an initial counter-trend break as could be unfolding this month. Such a labored, 3-wave corrective recovery satisfies the third of our three reversal requirements (following 1: a bearish divergence in momentum and 2: proof of trendy, impulsive behavior on the initial counter-trend break) and should not come as a surprise in the weeks ahead. And herein lies the importance of identifying a tighter but objective shorter-term risk parameter like 719.7. Until even such shorter-term strength is proven however, the trend is arguably down on any practical scale at this point and should not surprise by its continuance or acceleration.
Finally and from mammoth perspective, the monthly log active-continuation chart below shows the market’s break to a new all-time high above 208’s 769.9 previous all-time high and gross failure to sustain those frothy levels, a least thus far. To be sure, it’s not hard at all to question the risk/reward merits of a continued bullish policy “way up here”, and the past few weeks’ rollover price action is certainly contributing to this question. But the peak/reversal-threat die has certainly been cast. And the market, not unusually, has provided some outstanding highs and risk parameters at 719.7 and certainly 760.4 around which to objectively and successfully navigate this unique and compelling and very opportunistic development that sets the stage for some long-term exposure from the bear side.
These issues considered and following the neutralizing of al previously recommended bullish exposure for both short- and long-term traders, traders are advised to first approach recovery attempts to the 690-to-700-range of former support-turned-resistance as corrective selling opportunities with a recovery above 719.7 required to negate this specific call and warrant its cover. In lieu of such 719.7+ strength, further and possibly protracted losses straight away should not surprise.