February Live Cattle continued its advance on Wednesday, January 16, 2019. Another new high for the up move was established with futures reaching 127.80. This is just below resistance at 128.10 and forming a hanging man candlestick in the process. This is a potentially bearish candlestick formation. With futures unable to trade above resistance on Wednesday and the bearish candlestick, a breakdown below the session low (126.95) could lead to a test of support at 125.80. Support then comes in at 124.30. A break out above resistance puts the 129.825 resistance level in play. Winter weather continues to be the talk of the market as a major storm system is expected to hit the Midwest this weekend, followed by arctic temperatures. Cash continues its silence, but as futures rally producers are hopeful they are gaining leverage in pricing cattle. Packers have been reluctant to bid and producers are sitting back and waiting. Cutouts were mixed with choice declining 0.31 to 211.90 and select up 1.07 to 206.94. The choice select spread narrowed to 4.96. Meanwhile, the March Feeder Cattle continues to spin its wheels within the January 8th trading range. It broke down early to match the January 8th low at 153.05 then a late session rally took price back to the opening price levels, forming a doji candlestick. A break out above the 146.475 high could lead to a test of the 200 DMA at 148.10. A break down below 143.05 could lead to a test of the 140.775 support level. February Lean Hogs broke down hard from the 61.80 support level. It dropped below the 59.925 support level making the low at 59.50. It was able to find support here and settled above support at 60.05. Long-term moving average support at the 100 DMA looms at 59.175. A break down from here could see price test support at 58.25 and then 57.025. If support holds consolidation within Wednesday’s range is possible.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, January 17th at 3:00 pm. 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.
**Call me for a free consultation for a marketing plan regarding your livestock needs.* *
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.