December Live Cattle
The cattle continued its climb today violating the 117.725 high which I had labeled as the 3rd wave extreme. Our assent from the 4th wave low of 112.900 has now reached the 1 x 1 projected measurement (wave 5 equal wave 1) when it rose to the upper 118’s (5.800 + 112.900) peaking at 119.100. Being in the 5th wave of the structure one has to wonder where this move might terminate. There is mild divergence in the daily momentum indicator but this has not yet materialized in the lower time frames. Divergence in space is not in my opinion a useful tool and should be applied only at geometric locations. I employ pitchforks and channel lines to locate such levels.Currently the sloping channel extensions are coming in at +/-121 quite higher than our current close at 118.800. To achieve this level the 5th wave would have to extend which is prevalent in commodity markets. The subset wave structure of the 5th in progress is somewhat unclear. It appears we are near the highs of the 3rd of the 5th meaning we could see a subset 4th pullback which would most likely find support between 117.200 and 116.600. A move to here would be followed by another advance for the final 5th of the 5th. If a decline were to overlap the 116.325 price then that would be the information needed to assess this phase of the bullish structure complete and one should be on the lookout to sell any advance that displayed non-impulsive qualities at measurable Fibonacci levels.
Please join me tomorrow afternoon as I apply the wave theory to this and other commodity markets.