Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The October contract closed $2.60 higher at $148.525. The secondary (intermediate-term) trend remains down with the contract in short-term retracement uptrend. Given the theory of Moves of Three (in this case, three weeks against the prevailing trend) the contract could trade higher again this coming week. Resistance is pegged between $149.70 and $151.90, prices that mark the 50% and 67% retracement levels of the previous sell-off from $156.15 to the low $143.30. Weekly stochastics remain neutral to bearish while Friday's CFTC Commitments of Traders report showed noncommercial interests continuing to reduce their net-long futures position by 10,712 contracts.

Feeder Cattle: The August contract closed $3.40 higher at $214.125 last week. The secondary (intermediate-term) trend remains down with the short-term uptrend a retracement rally. Based on the theory of Moves of Three (in this case three weeks up against the prevailing downtrend) August feeder cattle could trade higher again this coming week. Resistance is between $214.65 and $221.25, prices that mark the 33% and 50% retracement levels of the sell-off from $227.80 through the $208.075 low. Weekly stochastics remain bearish.

Lean hogs: The October contract closed $0.40 higher at $64.125 last week. Despite a move to another 4-week high last week the secondary (intermediate-term) trend looks to still be down. Weekly stochastics are neutral-to-bearish indicating a test of the recent low of $59.45 is possible.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.47, up 4 cents for the week. The NCI.X has held support at its previous low of $3.29, though the recent sell-off left a number of bearish gaps on its weekly chart. Weekly stochastics are neutral-to-bearish, though the last secondary (intermediate-term) signal was a bullish crossover below the oversold level of 20% indicating the secondary trend is still up.

Soybean meal: The more active December contract closed $8.80 higher at $332.70, establishing a number of bullish signals on its weekly chart. Most notable is the bullish reversal as the contract traded outside the previous week's range and closed a bearish gap left two weeks ago. This would indicate the contract is set to rejoin its secondary (intermediate-term) uptrend after testing support at $321.90, a price that marks the 50% retracement level of the initial rally from $286.00 through $357.70.

The weekly Commitments of Traders report showed positions held as of Tuesday, August 4.

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