Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The December contract closed $0.25 lower last week. Technically, the December contract continues to indicate it has established a top, possibly a 5-point top, implying the secondary (intermediate-term) trend has turned down. However, due to the ongoing bullish commercial outlook indicated by the December to February futures spread, the market could once ignore bearish technical signals. Market volatility remains high, roughly 14.5%, while Friday's CFTC Commitments of Traders report showed noncommercial interests trimming their net-long futures holdings by 218 contracts.

Feeder Cattle: The November contract closed $5.05 lower last week. The market continues to indicate the secondary (intermediate-term) trend has turned down. If so the previous week's high of $245.75 could be considered the fifth point in a possible 5-point top. The previous week also saw the November contract's weekly stochastics establish a bearish crossover well above the overbought level of 80%.

Lean hogs: The December contract closed $3.825 lower last week, with the posted low of $89.35 a test of support pegged near $89.20. This price marks the 67% retracement level of the rally from $84.275 (low the week of August 18) through $99.00 (high the week of September 8). Resistance remains near $98.45, the 67% retracement of the previous downtrend from $105.50 (high the week of July 14) through the $84.275 low.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.06, up 13 cents for the week. The intermediate-term trend on the weekly chart is up, in step with the market's seasonal index through October. Last week's higher close established a secondary bullish crossover by weekly stochastics. The initial bullish crossover occurred the week of August 11. However, given the strengthening carry in futures spreads, look for basis to weaken meaning the cash market should continue to lose ground to the rally in the futures market.

Soybean meal: The December contract closed $19.50 higher last week. After weekly stochastics established a bullish crossover the previous week, the December contract extended its secondary (intermediate-term) uptrend to a test of resistance between $333.80 and $339.50 last week. These prices mark the 33% and 38.2% retracement levels of the previous downtrend from $411.40 through the recent low of $295.10. Given the strong uptrend (strengthening inverse) in the December to January futures spread, the December contract could soon test the 50% retracement level of $353.50.

Last Friday's CFTC Commitments of Traders were report showed positions as of Tuesday, October 14.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

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


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.

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .