Technically Speaking

Weekly Analysis: Livestock Markets

Last week's spike rally in Oct live cattle doesn't look to have changed its trend. (Source: DTN ProphetX)

Live Cattle: The October contract closed $0.125 higher at $143.975. Despite last week's spike rally technical indicators show the secondary (intermediate-term) trend is still down. Oct cattle posted a new low of $139.65, a test of major (long-term) support between $141.95 and $137.40 before rallying to a higher weekly close. However, both weekly and monthly stochastics remain bearish indicating the contract could retest this support before establish a secondary uptrend and bringing the ongoing major downtrend to an end.

Feeder Cattle: The October contract closed $0.55 lower at $198.925 last week. The secondary (intermediate-term) trend remains down. However, last week saw October feeders test major (long-term) support at $192.375 with its new low of $192.725 before posting a solid rally. Bearish monthly stochastics would indicate a possible retest of this support before both the major and secondary trends turn up.

Lean hogs: The October contract closed $3.60 higher at $61.60 last week. October lean hogs posted a bullish outside week, indicating it may try to rejoin its secondary (intermediate-term) uptrend that began, technically, back in late March. However, the contract has struggled to build bullish momentum as indicated by neutral-to-bullish weekly stochastics. The long-term monthly chart shows Wave 2 of a major 5-wave uptrend could soon be coming to an end.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.41, unchanged for the week. The secondary (intermediate-term) trend remains sideways with the NCI.X continuing to hold above major (long-term) support at $3.31. The minor (short-term) daily chart shows the NCI.X is in Wave 2 of a 5-wave uptrend with pegged at $3.38. This price marks the 61.8% retracement level of the Wave 1 rally from $3.32 through the high of $3.47.

Soybean meal: The more active December contract closed $1.90 lower at $312.70. Dec meal posted a bearish outside week indicating the contract could see continued pressure in the weeks ahead. Recent selling has been tied to commercial interests, indicated by the downturn in the December to January futures spread. Support is pegged at $302.90, a price that marks the 76.4% retracement level of the rally from $286.00 through the high of $357.70.

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