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Livestock Levels


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Live Cattle

The June Live Cattle contract made another new high on Thursday, April 20, 2017. It traded above the 61.8% retracement level (116.56) of the move from the January 19th high (121.45) to the April 5th low (108.675), reaching 117.475 which is just below resistance at 117.825. The failure at resistance led to a collapse in price to the session low at 115.80. Live Cattle recovered from the low, staging a late day rally to end the session in the middle of the days range. It settled at 116.475, formed a Doji candle (which indicates indecision), and with the failure once again at the 61.8% retracement level, could signal a potential short term top in the market. If the June contract trades below the Thursday low, a test of the 50% retracement level (115.0625) and then the 100 DMA (114.90) is possible. The 8 DMA (114.875) is nearby and the 50 DMA is at 114.625. The 38.2% retracement is at 113.55. The 8 DMA is ready to cross above the 100 DMA which could be another bullish indication. If the market rebounds and takes out the Thursday high, at test of resistance at 118.50 is possible. Trendline resistance is at 119.40 and the Jan 19 high is next.

Feeder Cattle

The May Feeder Cattle also staged a strong early rally, testing resistance at 143.20 as it reached a high of 143.00 before failing and trading to the low of the day at 139.625. It spent the remainder of the session consolidating and settled near the low at 139.75. I think longs started lightening up in front of Fridays Cattle on Feed report. The Cattle on Feed report comes out after the close and is expected to show:

Cattle on Feed 99.7% Range 98.7 to 100.5% of April 2016

Placements - 106.5% Range 1101 to 109.5% of March 2016

Marketings 109.4% Range 108.1 to 110% of March 2016

Trading below the Thursday low could send price down to test support at the 8 DMA (138.775) then the 13 DMA (136.10) and then 135.225. A rally above the Thursday open (141.10) could see price test resistance at 143.20 and then 144.175.

Lean Hogs

The June Lean Hogs broke down below the 70.00 support level, trading down to 68.55, the low for the day. It rebounded ever so slightly to settle at 68.675. A continuation to the downside could test support at 67.90 and then the 100 DMA at 67.35. Support then comes in at 66.575 and 66.025. A rebound off the Thursday low could see a test of resistance at 70.00 and then the 50 DMA ( 70.775).

For those interested I hold a weekly livestock webinar on Wednesday, April 21at 3:00pm. 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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