Live Cattle
April Live Cattle gap opened higher on Thursday March 16, 2017 and except for one minor attempt to close the gap (during the first hour of trading) never looked back. It took out trendline resistance (118.70) and the March 1st high at 118.95, making a new high for the move at 119.50. Live Cattle has the January 20 high (119.875) in its sights and the January 19th high (121.45) is a key battleground for the rally. A close above the January 20 high puts the May 2016 high (124.675) in focus. A failure from the January 19th high could signal a significant top and indicate a possible double top formation. More on this possibility as it evolves. If traders want to lighten up some long positions in front of the weekend, a possible attempt to close today’s gap could occur. Yesterday’s high is 118.075 and today’s low is 118.20. A tiny gap, but a gap just the same. Support could be found here and also just above at the trendline at 118.70.
Feeder Cattle
April Feeder Cattle also gap opened higher from yesterday’s high (gap – 129.025 to 129.10). It never looked back and rallied to just above the 200 DMA (130.75), to the day’s high at 130.925. Feeder Cattle couldn’t close above the 200 DMA as it drifted lower at the end of the day; ending the day at 130.525.A break above the 200 DMA could lead to a test of the January high at 131.75. The next resistance level is at 133.00. A Friday selloff could lead to a test of the gap and then 127.575.
Lean Hogs
April Lean Hogs couldn’t keep up with the Cattle markets. It made an early attempt at a rally, bouncing off its early low at 69.85 to its high for the day at 70.775. The rally stalled and Lean Hogs traded down to its low at69.375. Price rebounded from here, making a lower high at 70.425 and then grinding lower to end the session below the 70.00 support level at 69.85. Support is nearby at the 8 DMA (69.30) and then the 21DMA at 68.825. If the market bounces off support a test of the March 14 high (71.275) is possible. The next level for possible resistance is at 72.875. A breakout from this level could send price up to resistance at 77.90. A breakdown from the 21 DMA could see price test support at 67.90.
For those interested I hold a weekly livestock webinar on Friday, March 17 at 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.