Technically Speaking

Monthly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The December contract closed at $141.725, up $10.80 on the monthly chart. The major (long-term) trend is difficult to call at the end of October. The contract itself posted a bullish key reversal, trading outside the September range before posting its higher close. Monthly stochastics posted a bullish crossover, but fractionally above the oversold level of 20%. Normally this indicates a market is moving into a sideways trend. Initial resistance is pegged near $145.20, then $150.60. These prices mark the 38.2% and 50% retracement levels of the previous downtrend from $172.75 through October's low of $128.10. Note that the latter price was a test of support near $126.50.

Feeder Cattle: The November contract closed at $190.90, up $18.30 on the monthly chart. Despite the higher monthly close the major (long-term) trend remains down. However, the contract has rallied off its test of support at $165.60, a price that marks the 50% retracement level of the previous uptrend from $85.50 (December 2008 low) through $245.75 (October 2014 high). Monthly stochastics remain bearish above the oversold level of 20%.

Lean Hogs: The December contract closed at $59.20, down $7.525 on the monthly chart. Despite the lower monthly close the market remains in Wave 2 of a major (long-term) 5-wave uptrend pattern. This depends on the market staying above its March 2015 low of $57.80, with a solid test seen in October with a close near the monthly low of $59.025.

Monthly stochastics are bearish below the oversold level of 20% and could establish a confirming bullish crossover in the coming months. The initial bullish crossover occurred at the end of March 2015.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.55, up 2 cents for the month. The NCI.X remains in a major (long-term) 5-wave uptrend pattern, holding support between $3.44 and $3.23. These prices mark the 50% and 67% retracement levels of the rally from $2.81 (October 2014) through $4.06 (July 2015). October saw the NCI.X post a high of $3.64, slightly above the September peak of $3.63. Monthly stochastics remain bullish.

Soybean meal: The December contract closed at $304.40, down $4.60 on the continuous monthly chart. The major (long-term) trend remains sideways with support at the double-bottom low of $295.10 (October 2014) and $296.30 (June 2015). Both those months saw bullish reversals, with the one from October 2014 registering a as a bullish key reversal. Still, the market has been unable to generate momentum with monthly stochastics holding below the oversold level of 20%.

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