Live Cattle (December)
December live cattle started the week under moderate pressure but were able to defend the lower end of last weeks trading range, 118.20-118.525. So long as the bulls continue to defend this pocket, they remain in clear control. A break and close below could spark a round of long liquidation from funds, who have been establishing a net long position over the past several weeks. Friday’s Commitment of Traders report showed funds bought roughly 22,000 contracts, extending their net long position to 60,498 contracts. The RSI (relative strength index) has been showing signs of being overbought for the better part of the last month, since the board was at 112. The bear camp needs to see fundamentals slow to spark pressure on futures. The bulk of last week’s cash trade came in near 116, helping the board firm. If demand and cash begin to stall, we could see that spark some moderate selling. A break and close below support from 118.20-118.525 could open the door for a run at 113.75-114.25.
Resistance: 119.55-120.525**, 124.00-124.175****
Support: 116.10-116.90**, 113.75-114.25****
Feeder Cattle (January)
January feeder cattle continued to creep higher, taking prices to their highest levels since May 10th. The RSI is at 70.64, technically overbought but far from an extreme reading. Feeder cattle have continued to be constructive on the chart and the path of least resistance remains higher. First technical support comes in from 144.50-145.00, this pocket represents trendline support from the contract’s lows at 126; just two months ago! A break and close below here could lead to a further decline and near-term consolidation. On the resistance side, our pocket remains intact from 146.85-147.975, this pocket represents a key retracement and the May 10th highs. Consecutive closes above this pocket could pave the way for a continuation and an eventual retest of contract highs, 159.725.
Resistance: 146.85-147.975****, 152.25-152.80**, 159.725****
Support: 144.50-145.00***, 142.225-143.15***, 138.65-139.00****
Lean Hogs (December)
Today was the 14th consecutive session of December lean hogs trading with a 64 handle. A close towards the low end of the range is cause for concern. A break and close below 63.075 could open he door for a run at the September 11th gap near 61.50. There is still good volume in the December contract, but you will want to start looking at the defferds if you want to be buyer. This will be our last week of December technicals, we will be moving to February, which is at a 10.00 premium.
Resistance: 69.30-70-15***, 72.15-72.75****
Support: 63.075**, 61.00-61.525***
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.