Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The February contract closed $2.375 higher at $162.475 last week after. Despite the higher weekly close the market remains in a secondary (intermediate-term) downtrend. However, the Feb contract has held support pegged near $158.125, a price that marks the 33% retracement level of the previous uptrend from $128.85 through the high of $172.75. The February to April futures spread continues to reflect a bullish commercial outlook meaning the futures market should find support between the previous mentioned $158.125 and the 50% retracement level of $150.80. Weekly stochastics remain bearish but could be indicating a period of consolidation in the coming weeks.

Feeder Cattle: The January contract closed $6.425 lower at $213.725 last week. The secondary (intermediate-term) trend remains down with the contract below initial support near $215.35. This price marks the 33% retracement level of the previous uptrend from $167.40 through the high of $239.30. Next support is at the 50% retracement level of $203.35. Weekly stochastics remain bearish indicating an extension of the secondary downtrend is likely.

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Lean hogs: The February contract closed $0.35 lower at $81.55 last week. While the secondary (intermediate-term) trend remains down, the contract may have established a spike low with its move to $78.675 (week of December 15). With weekly stochastics at the oversold level of 20% the contract looks to be stabilizing between support near $79.325 and $81.925, prices that mark the 76.4% and 67% retracement levels respectively of the previous uptrend from $72.95 through the high of $99.925.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.80, up 4 cents for the week. The secondary (intermediate-term) trend remains up. However the NCI.X is testing its next target of $3.84, a price that marks the 50% retracement level of the previous downtrend from $4.86 through the low of $2.81, in conjunction with weekly stochastics calculated in the upper 90% range (indicating a sharply overbought market). This combination could lead to a turn to a secondary downtrend in the near future. If so support is pegged between $3.47 and $3.31, the 33% and 50% retracement levels of the current uptrend.

Soybean meal: The January contract closed $16.20 higher last week at $379.70. Weekly stochastics have once again turned bullish indicating the contract has resumed its secondary (intermediate-term) uptrend. Next resistance is at its spike high of $398.90 with a longer-term potential target the contract high of $410.30. The inverse in the January to March futures spread is strengthening again, closing at $17.90, and in position to test its recent high (weekly close only) of $20.50 (week of October 27).

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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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