Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The April contract closed $3.475 higher at $152.275 last week. Technical indicators continue to show the secondary (intermediate-term) trend is down. The April contract closed well off its weekly low of $146.65, though still lower for the week. Stochastics were well below the oversold level of 20% early, with the late rally erasing the potential for a bullish crossover. However, last week's low was also a test of support at $145.825, the 61.8% retracement level of the previous uptrend from $130.20 (week of November 20, 2013) through the high of $171.10 (week of November 23, 2014). Given the market's penchant for posting spike highs and lows, this test of support could prove to be the conclusion of Wave C of April live cattle's downtrend, setting the stage for a move to a possible secondary uptrend.

Feeder Cattle: The March contract closed $3.375 higher at $205.20 last week. While technical indicators continue to show the secondary (intermediate-term) trend is down, the spike rally by March feeders in position for a bullish turn. Last week's low of $194.40 was a test of support near $193.90, the 67% retracement level of the previous secondary uptrend from $172.00 (week of March 31, 2014) through the high of $237.80 (week of October 6, 2014). Weekly stochastics finished just short of establishing a bullish crossover Friday, leaving the door open for another possible test of support in the coming weeks.

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Lean hogs: The April contract closed $1.60 higher at $72.25 last week. The secondary (intermediate-term) trend looks to have turned sideways as April lean hogs consolidated within the previous week's range from $77.475 to $70.00. Weekly stochastics are well below the oversold level of 20% and nearing a bullish crossover, a move that would indicate a change in the secondary trend.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.44, down $0.14 for the week. The secondary (intermediate-term) trend remains down with next support at $3.31. This price marks the 50% retracement level of the previous uptrend from $2.81 through the high of $3.80. National average basis strengthened last week with the NCI.X calculated at 26 cents under the close of the March futures contract.

Soybean meal: The March contract closed $1.60 lower last week at $329.90. The secondary (intermediate-term) trend remains sideways with the March contract holding above support at $321.30 while weekly stochastics are neutral to bearish. Look for both futures and futures spreads to remain volatile, meaning wide daily and weekly price swings.

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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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