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Livestock Levels


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Live Cattle

February Live Cattle closed above resistance (117.825) on Friday, January 13, 2017. A break above the Friday high (118.75) could lead to a test of January 11ths high at 119.70. If Live Cattle can push above here a run to trendline resistance at 121.60 is possible. A failure from 117.825 support and Live Cattle could test strong support at the 8 (116.95), 13 (116.70) and 21(116.225) DMAs. The 8 is higher than the 13 and 21 DMAs and the 13 is above the 21DMA .This is potentially bullish and could lead to higher prices. The moving averages are close together however, and Live Cattle needs to start off Tuesday with some strength to get the moving averages to create some separation. If price cant gather upward momentum, the moving averages can converge and reverse direction. This could put pressure on price and lead to a breakdown of support. A breakdown below the 21 DMA could lead to a test of the January 6th low at 113.975.

Feeder Cattle

March Feeder Cattles strong rally off of the 21 DMA (127.675) on January 13 is putting upward pressure on price. A break above 129.55 could lead to a test of trendline resistance at 130.85. A close above the trendline could lead to a push to resistance at 133.00. If Feeder Cattle breaks down below the 21 DMA a test of the 8 DMA (126.575) is possible. There is strong moving average support below the 8 DMA. The 13 (126.325), 50 (125.575), and100 (126.05) DMAs are nearby. If Feeder Cattle breaks down below 50 DMA, a test of support at the January 9th low (122.925)120.30 is possible.

Lean Hogs

February Lean Hogs has been consolidating at the 200 DMA since piercing it on December 19. This consolidation has lead to the formation of a rectangle. Last week saw 3 closes above the 200 DMA (65.275), but they were close to the average. Price is above all my moving averages (the 8, 13, 21, 50 and 100). Price needs to pull away from the 200 DMA and get above the January 3 high (66.90) to break out above the rectangle. The objective from a breakout would be 71.65. If price falls below the 200 DMA, a test of the December 27 low of 62.15 is possible.

For those interested I hold a weekly livestock webinar on Thursday, January 20 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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