Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The December contract closed $0.575 lower last week. From a technical point of view, last week's move to a new high of $169.60 followed by a lower weekly close would suggest a move to a secondary (intermediate-term) downtrend. However, the live cattle market as shrugged off bearish technical signals before during its major (long-term) uptrend. Regardless, the last important signal in weekly stochastics was a bearish crossover. Market volatility remains high, possibly leading to continued liquidation of the noncommercial long futures position. Fundamentally the market remains bullish.

Feeder Cattle: The November contract closed $1.775 lower last week. Similar to live cattle, last week's move to a new high ($245.75) followed by a lower weekly close would suggest a possible move to a secondary (intermediate-term) downtrend. However, as like live cattle, the feeder market has ignored bearish technical signals in the past due to continued bullish fundamentals. Still, if last week was a turn it would once again suggest the possible establishment of a five-point top.

Lean hogs: The December contract closed $1.375 higher last week. The minor (short-term) trend is sideways, with support near $91.65 then $89.175. The secondary (intermediate-term) trend remains down with resistance at $98.45.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $2.93, up 9 cents for the week. While the secondary (intermediate-term) and major (long-term) trends remain down, the cash market's 5-year and 10-year seasonal indexes show a tendency to move higher through the end of the month. National average basis (versus the September 2015 futures contract) of 79 cents was 2 cents weaker from the previous Friday's calculation.

Soybean meal: The December contract closed $12.20 higher last week. The strong rally by the December contract last week established a bullish crossover by weekly stochastics, indicating the secondary (intermediate-term) trend has turned up. If the market can build bullish momentum, the initial upside target is $339.50. This price marks the 38.2% retracement level of the previous downtrend from $411.40 through the recent low of $295.10.

To track my thoughts on the markets throughout the day, follow me on Twitter:www.twitter.com\Darin Newsom

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Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

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