Technically Speaking

Weekly Analysis: Livestock Markets

Source: DTN ProphetX

Live Cattle: The April contract closed $1.50 higher at $126.125. April live cattle remain in a 3-wave downtrend, with the recent rally (Wave B, second wave) testing resistance near $127.25. This price marks the 76.4% retracement level of Wave A from $130.10 through the low of $118.05. The latter was itself a test of initial support near $118.15, the 38.2% retracement level of the uptrend from the contract low of $98.85 through the $130.10 contract high. When Wave B (the contract's short-term uptrend on its daily chart) ends, Wave C is expected to move below the low of Wave A, with downside targets near $114.50 and $110.75.

Feeder Cattle: The March contract closed $4.200 higher at $150.925. March feeders remain in a secondary (intermediate-term) 3-wave downtrend, with the recent rally amounting to Wave B (second Wave) and testing resistance between $151.05 and $154.05. These prices mark the 61.8% and 76.4% retracement levels of the Wave A from $159.925 through the low of $138.30 (week of December 18). When the contract's minor (short-term) uptrend (Wave B) tops, Wave C is expected to move below the Wave A low, with a downside target near $133.50.

Lean Hogs: The more active April contract closed $0.25 lower at $73.55. April lean hogs remain in a secondary (intermediate-term) downtrend. The contract posted a new 4-week low of $71.675 last week, with support pegged between $72.10 and $70.50. These prices mark the 38.2% and 50% retracement levels of the previous uptrend from the contract low of $63.75 through the recent contract high of $77.25. Weekly stochastics remain bearish below the overbought level of 80%.

Corn (Cash): The DTN National Corn Index (NCI, national average cash price) closed at $3.30 3/4, up 5 1/2 cents for the week. The NCI remains in a secondary (intermediate-term) uptrend on its weekly close-only chart. However weekly stochastics are above 80%, indicating a sharply overbought situation and in position for a bearish crossover, as the NCI tests resistance near $3.30. This price marks the 61.8% retracement level of the previous downtrend from the high weekly close of $3.48 through the low weekly close of $3.00.

Soybean meal: The March contract closed $4.30 lower at $331.40. The contract continues to post a series of spike highs followed by dramatic sell-offs. It could be argued that its secondary (intermediate-term) trend is a wide-ranging sideways pattern between the recent spike high of $351.20 and spike low of $310.30. Weekly stochastics remain neutral-to-bullish above the oversold level of 20%, and below the midpoint of the stochastics range at 50%.

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