Technically Speaking

Weekly Analysis: Livestock Markets

Live Cattle: The June contract closed $1.825 lower at $145.275 last week. Despite the lower close the secondary (intermediate-term) trend is up. The contract fell back from its test of resistance at $146.70, the 33% retracement level of the downtrend from $162.925 through the low of $138.60, to test support near $145.65. This price marks the 33% retracement of the rally off the $138.60 low through last week's high of $147.675. Next support is at the 50% retracement level near $143.15.

Feeder Cattle: The May contract closed $2.275 higher at $209.725 last week. The secondary (intermediate-term) trend remains up. The contract has moved above initial resistance near $208.05, a price that marks the 33% retracement level of the previous downtrend from $236.325 through the recent low of $193.90, and could now target the 50% retracement level near $215.10.

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Lean hogs: The June contract closed $4.625 lower at $75.425 last week. The move to a new low of $73.50 reestablished the secondary (intermediate-term) downtrend. However, the contract was able to rally off its new low, and with stochastics indicating a continued oversold situation, could set the stage for a possible bullish crossover in the coming weeks. If so, this would be a secondary (confirming signal) indicating the contract could establish a spike reversal.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.57, down $0.04 for the week. The secondary (intermediate-term) trend remains down with the last signal a bearish crossover by weekly stochastics the week of December 29. The NCI.X fell back from its test of resistance at $3.68, the 67% retracement level of its initial sell-off from $3.80 through the low of $3.44, setting the stage for another test of support at $3.47. This price marks the 33% retracement level of the uptrend from $2.81 through the $3.80 high.

Soybean meal: The May contract closed $0.70 lower at $327.00 last week. A bearish crossover by weekly stochastics above the oversold level of 20% indicates the secondary (intermediate-term) trend has turned sideways. Resistance is at the recent high of $351.70, a test of the 50% retracement level ($351.00) of the previous downtrend from $409.60 through the low of $292.30. The May contract is testing support at $325.40, the 50% retracement level of its rally from $292.30 through the high of $358.50. The trendline connecting the $292.30 low and the $314.50 low (week of January 20) projects support at $325.60.

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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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