Technically Speaking
Darin Newsom DTN Senior Analyst

Friday 02/14/14

April Live Cattle Range Bound - For Now

Back on January 27 I posted a blog talking about a possible top in the April live cattle contract. Since then the contract has been consolidating near its high of $143.125 (week of January 19), unable to move below support at the four-week low of $138.60. Friday's weekly close of $141.075 is near mid-range.

Source: DTN ProphetX

Where might the market go from here? Weekly stochastics (second study) continue to indicate the trend has turned down. However, the uptrend in the April to June futures spread (bottom study, green line) reflects a still bullish commercial outlook meaning the futures market could soon push to a new high.

The key will be how this spread acts as it tests its previous high of $8.925 (April over the June). If the spread moves to a new high, look for the futures market to follow suit. On the other hand, if commercial traders start to sell, weakening the spread, the trend in the April futures contract could also move back toward support at the four-week low.

If the secondary (intermediate-term, weekly chart) trend does turn down, longer-term support remains pegged near $136.40, a price that marks the 38.2% retracement level of the previous uptrend from the low of $125.55 (week of May 19, 2013).

To track my thoughts on the markets throughout the day, follow me on Twitter:\DarinNewsom

Posted at 2:22PM CST 02/14/14 by Darin Newsom
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