Technically Speaking

Monthly Analysis: Livestock Markets

Darin Newsom
By  Darin Newsom , DTN Senior Analyst
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Source: DTN ProphetX

Live Cattle: The December contract closed at $125.625, up $10.375 on the monthly chart. The monthly chart continues to show a standard major (long-term) 5-wave uptrend. Wave 3 looks to be well under way with the rally seen off the August Wave 2 low of $104.20. Wave 3 is projected to peak above the Wave 1 high of $134.55 from May 2017. A potential target price is $143.475, the 61.8% retracement level of the previous downtrend from $172.75 (October 2014) through the low of $96.10 (October 2016).

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Feeder Cattle: The January contract closed at $159.575, up $5.575 on the monthly chart. The market remains in a major (long-term) 5-wave uptrend with current move possibly Wave 5. If that's the case, Waves 1 and 2 were small between October 2016 and February 2017. Monthly stochastics are nearing the overbought level of 80% indicating this could be the final wave of the uptrend. Initial resistance is at $164.725, a price that marks the 38.2% retracement level of the previous downtrend from $245.75 (October 2014) through the October 2016 low of $114.65. The May 2017 high of $163.50 still looks to be the peak of Wave 3.

Lean Hogs: The December contract closed at $68.00, up $8.05 on the monthly chart. The major (long-term) trend looks to be sideways with a wide range between resistance at $87.05 and support at $57.75. Monthly stochastics are neutral-to-bearish near the mid-point of the 20% (oversold) to 80% (overbought) range.

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.03 1/4, down 6 1/2 cents for the month. The major (long-term) trend remains sideways-to-down. The last three long-term highs have been lower, as have the last two major lows. This would suggest that the August 2016 low of $2.73 is a long-term target. October saw the NCI.X post a range of only 8 1/4 cents as market volatility continues to decrease. Monthly stochastics are neutral-to-bearish near the oversold level of 20% indicating bearish momentum is still possible.

Soybean meal: The more active December contract closed at $311.80, down $4.00 on the continuous monthly chart. The market still looks to be in a major (long-term) narrowing sideways trend. Support remains at $299.90, the 76.4% retracement level of the previous rally from $258.90 (February 2016) through the high of $432.50 (June 2016). Trendline resistance comes in at $346.20 during November. Monthly stochastics are neutral-to-bullish, near the oversold level of 20% indicating bullish momentum could start to strengthen.

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