Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The August contract closed $2.20 lower at $123.85. As discussed last week, August live cattle look to have Live Cattle: The August contract closed $2.20 lower at $123.85. As discussed last week, August live cattle look to have established a double-top formation on its weekly chart near the previous high of $127.50. However, last week's peak was $127.65 before the contract fell back. This could be viewed as either bullish or bearish. From the bullish side, the move to a new 4-week high would suggest an extension of the secondary (intermediate-term) uptrend is possible. Recall that the previous week saw August live cattle post a bullish outside range. The bearish argument would be that last week's activity established a spike reversal, offsetting the bullish signs from the previous week. Furthermore, weekly stochastics remain above the overbought level of 80% and in position for another bearish crossover. Add to that the contract's minor (short-term) trend is down while the market's major (long-term) trend is up. Look for continued volatile trade in live cattle.

Feeder Cattle: The August contract closed $4.55 lower at $154.175. Secondary (intermediate-term) patterns look more clear-cut for August feeders than August live cattle. The contract continues to hold below its previous high of $163.50, with the most recent signal by weekly stochastics a bearish crossover above the overbought level of 80% the week of May 1. This indicates the secondary trend remains down with initial support at $150.85, a price that marks the 23.6% retracement level of the previous uptrend from $109.90 through the $163.50 high. The 38.2% retracement level is down at $143.025, and the 50% level at $136.70.

Lean Hogs: The August contract closed $0.35 higher at $82.05 last week. The contract failed to post a new 4-week high last week while stochastics show August hogs to still be sharply overbought. Also, weekly stochastics are nearing a potential bearish crossover above the overbought level of 80%. On its daily chart the contract looks to have established a minor (short-term) downtrend complete with a double-top near $82.70 and a bearish crossover by daily stochastics, most recently on May 30.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.48, up 12 1/2 cents for the week. The secondary (intermediate-term) trend turned sideways-to-up with last week's bullish breakout. However the NCI.X is already testing resistance at $3.51 3/4, a price that marks the 61.8% retracement level of the previous downtrend from $4.00 1/2 through the low of $2.73. Though weekly stochastics have climbed back above the overbought 80% level, a move above resistance by the NCI.X could lead to a test of the 76.4% retracement level at $3.70 1/2.

Soybean meal: The July contract closed $4.00 higher at $305.90. As discussed last week, July bean meal now looks to be in a secondary (intermediate-term) uptrend has turned up. Confirmation of this would be a move to a new 4-week high beyond $317.90. This likely won't happen this coming week, barring a volatile bullish move by soybeans coming out of a weather weekend Monday. Initial resistance for July meal is at $310.90, a price that marks the 23.6% retracement level of the previous downtrend from $357.20 through the recent low of $296.60. The 38.2% retracement level is up at $319.70.

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