February live Cattle
A rather whippy trading session played out in the cattle futures today. The three dollar plus range was the largest seen in over two weeks. The current week’s ATR is , however , relatively small measuring only .275 as compared to the 14 period reading of over 4.00. The market’s advance from the recent low of 122.650 looked rather unstable to me and thus gave way to today’s sharp selloff which as witnessed was quickly snapped up just above the .786 retracement level. The market seems poised to make a move and currently rest just beneath the hourly channel line. I’d have to lean to the short side base on my assessment of the structural nature of the sell-off from early November. It appears impulsive to me. In my opinion a hold under 125.10 could trigger a resumption of selling pressure. Downside target comes in at +/-119.700. First contention level rests at +/-122. On the other side of the coin a violation of 125.950 that is able to hold above the channel would change the outlook. Upside projection comes in at roughly 127.700. A move in either direction that settles near an extreme would fulfill the week’s ATR estimate. Please contact me at Walsh Trading to discuss suggested option strategies designed to take advantage of either scenario.