Rolls Are Over
The short specs rolling to Dec, and mills having to buy July on a fix, appear to have finished this process at precisely 0400 today. Then July collapsed. It had muscled itself to +200 vs Dec, from -100, and then surrendered. Whats left in July after today will be nearly all commercial accounts, jockeying to see who gets or gives up certs.
This quick plunge was all about position rolls, and had little to do with other factors. But one bearish weather event did surface, with some rains in GA and SC, with more coming. Those two states were dealing with a dry spell, but that looks to be over. India’s monsoon is still late and sputtering.
We never got the “perfect short” entry and are watching this meltdown from the sidelines. Can’t get it all. There has to be some sort of weather premium in the market as summer gets into high gear, and if our 6.9 Mb carryout is correct, then 55c may be a ballpark fall low. So what premium would one place above that in the first week of June? A dime? 65c sort of looks about right for now, even if the market does make a new low by a few ticks. 75c is a lot different from 65c, so we don’t believe there is much left to the downside for now. We remain negative for the long term, and in the short term disgusted for not selling at lower levels.
From Dave Toth, tech analyst at RJO. The market’s failure below 6690 negates the specific base reversal threat we’ve recently discussed and left smaller and larger degree corrective highs in its wake at 6872 and 6991. The market is now required to recoup to resurrect any base reversal count. Until and unless such strength is shown, the second half of May’s recovery from 6450 to 6991 high may be considered a 3 wave and thus corrective affair that warns of a resumption of the past year’s major downtrend that preceded it to a least one more 5th wave round of new lows below 6450.
As always, please use protective buy and sell stops when trading futures and options.
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