Live Cattle
The December Live Cattle contract broke down below the 124.70 support level and the rising 8 DMA (124.75) on Tuesday, November 7, 2017.It traded down to the session low of 123.50, which is just above the 123.125 support level. It was able to bounce from here (late session rally) and it ended above the 124.70 support level at 124.75, forming a hammer candlestick in the process. The session high (125.60) could be the key level for Wednesday. If price can rally and hold above here (125.60), a test of the lower part of the resistance zone (127.15 to 128.30) is possible. Look to buy a break out above the Tuesday high, with the price objective to the 127.15 resistance level. Place stops appropriate for your account size and risk tolerance. Trading below the 124.70 support level could lead to a retest of the Tuesday low and the 123.125 support level. The negotiated cash market was quiet Tuesday. The fedcattlexchange.com auction is on Wednesday with 1,191 head for sale. Tuesday afternoon boxed beef cutout values were sharply higher on Choice and Select on moderate to good demand and moderate offerings. Choice was up 2.07 to 212.64 and Select was up 2.99 to 197.76 on 116 loads. The choice/ select spread narrowed to a plus 14.88. The estimated cattle slaughter for Tuesday was reported at 118,000.
Feeder Cattle
The January Feeder Cattle contract barely broke down below the 159.975 support level, trading down to the low at 159.40, just above the rising 8 DMA (159.375). It recovered from here and overtook the 159.975 level and ended the session at 160.775. It was a day of consolidation, forming an inside day candle (trading within the Monday range) and setting Wednesday as an opportunity to buy a breakout above the 161.25 Tuesday high or sell a breakdown below the Tuesday low. Rebounding from the high could lead to a test of the Thursday high (162.075). A continuation higher could lead to a test of resistance at the May 4th high (163.50). A pullback from the low could lead to a test of support at 158.10.
Lean Hogs
The December Lean Hogs contract broke down from the open on Tuesday, trading down to a low of 63.60 before recovering and ending the session just below support at the rising 21 DMA (64.225) at 64.05. The rising 21 DMA will be the pivot for trading on Wednesday, in my opinion. Trading and staying above this level could lead to a test of the 64.80 resistance level and then the 13 DMA (65.10). Trading below the 21 DMA could lead to a test of support at 63.325.
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursday, November 9 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.
**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.