Live Cattle
The June Live Cattle contract traded to the 61.8% retracement level (116.56) of the move from the January 19th high (121.45) to the April 5th low (108.675) on Tuesday, April 18, 2017. It peaked at 116.90 in the first 45 minutes of trading and then collapsed to the low of the day at 115.35 before spending the remainder of the day trading between 116.125 and the low. The session formed a Doji candle, which indicates indecision, and with the failure at the 61.8% retracement level, could signal a potential short term top in the market. If the June contract trades below the Tuesday low, a test of the 50% retracement level (115.0625) and then the 100 DMA (114.775) is possible. The 50 DMA (114.60) is next and the 8 DMA is at 113.525. If the market rebounds and takes out the Tuesday high, at test of resistance at 117.825 and 118.50 is possible.
Feeder Cattle
The May Feeder Cattle also staged an early rally before breaking down from the high (141.875) and trading to the low of the day (139.375) and then consolidating the remainder of the trading session. It formed a spinning top candle, indicating the bulls may be losing control of the market. Trading below the Tuesday low could send price down to test support at the 8 DMA (137.05) and then 135.225. The 13 (134.825) and 21 (134.325) DMAs are nearby. A rally above the high could see price test resistance at 142.30, 143.20 and then 144.175.
Lean Hogs
The June Lean Hogs broke down below the 72.875 resistance level, trading below the 50 DMA (70.875) and making the low for the day at 70.625. It wasn’t able to stay below the support level as it recovered from the low and ended the session above the 50 DMA at 71.35. The 50 DMA will be the pivot on Wednesday. If Lean Hogs can break below the 50 DMA it can test nearby support levels at 70.425 (TL), 70.00 and 68.575. Closing below the trendline could be a bearish signal. A rally above the high could see 72.875 tested and panic short covering could see price reach 74.10.
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.
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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.