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Livestock Levels


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Live Cattle

February Live Cattle continued its attack on the 21 DMA (114.75) on Friday, January 6, 2017, finally breaking below the moving average after approaching it the prior 3 trading days. The break didnt last as buyers took control of trade and took price above the moving average. It closed (114.975) out the wee k just above the moving average and formed a hammer candle formation (small wick above close). The hammer and the close above the 21 DMA is potentially bullish. If Live Cattle can sustain a rally above 115.20, a test of the 116.575 resistance level is possible. A breakout above here could lead to a test of the December 30 high at 118.50. Live Cattle doe have obstacles in its way. The 8 DMA (115.90) has crossed below the 13 DMA (116.00) and this could be bearish. If Live Cattle cant sustain a rally above the 115.20 level a breakdown below the 21DMA is likely. A close below the 21 DMA could lead to a test of the December 15 low at 112.65. Support then comes in at the 200 DMA (111.85).

Feeder Cattle

March Feeder Cattle is consolidating below the 50 DMA (124.65) on the continuous chart. Since closing below the 50 DMA on January 4, Feeder Cattle hasnt been able to breakdown with any conviction. It has some technical bearish factors that could lead to a breakdown but it hasnt been able to push down price. The 8 DMA (125.15) has crossed down below both the 13 (128.25) and 21 DMAs (127.475). The 13 DMA just broke below the 21 DMA. The 8 has crossed below the 100 DMA (126.85). Price is trading below the 8, 13, 21, 50,100 and 200 DMAs (135.95). These are bearish markers for price. If Feeder Cattle breaks down below the December 6 low (122.825), a test of support at 120.30 is possible. Support then comes in at 118.10. Feeder Cattle could reverse course if it can close above the 50 DMA. A break above the 50 DMA could lead to a test of the 100 DMA. This could be a difficult trade with the short term moving averages turning down.

Lean Hogs

February Lean Hogs has been consolidating at the 200 DMA since piercing it on December 19. The 21 DMA has been rising and is approaching the 200 DMA. Price is trapped between the 200 DMA (65.70) and the 21 DMA (63.575). The 8 and 13 DMAs are intertwining. Hogs tested the 21 DMA on Friday and it contained the selling. With the December 19 high (66.575) and the January 3 high (66.90), a possible double top is in place. A close below the December 27 low (62.15) could take price down to 57.40. If Hogs close above the 200 DMA, a test of resistance at 67.90 then 70.00 is possible.

For those interested I hold a weekly livestock webinar on Friday, January 13 at 2:30pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.

Sign Up Now

Ben DiCostanzo

Senior Market Strategist

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.



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About the author


Ben DiCostanzo
Senior Market Strategist
Walsh Trading

I began my career in the Securities industry working as a runner on the floor of the New York Stock Exchange while I attended Pace University. I then started working for Salomon Brothers in their Government Bond Trading arena. After graduating from Pace University with a degree in Accounting, I transferred to Chicago and became a member of the Chicago Mercantile Exchange utilizing my experience to execute trades and manage risk for institutional clients as a broker for Salomon Brothers on the trading floor. I then embarked to trade for my own account in the stock indices pits as a local before moving off the floor to aid and assist individual clients in their trading endeavors. I now work at Walsh Trading holding a series 3 broker’s license whose duties include being the firm’s Chief Market technician.

I understand that every client's needs are different, and I pride myself in tailoring my service to each client's unique circumstances and needs. Individual client experience, risk tolerance, and capital all play a role in how I approach the markets. I am involved in all markets using technical analysis to find opportunities. My approach is driven by the principles of capital preservation.

My trading philosophy is that if you can recognize and manage the risk, you have a better chance to be successful in trading. I advise clients to always use stops as money management in my opinion is the most important ingredient in trading commodities.

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