February Live Cattle
- The October Cattle on Feed report sent the contract into a locked limit-down trade on Monday, June 23rd.
- Despite staging a modest recovery rally, there is notable divergence in the +DM (positive directional movement), indicating that the prices may continue moving lower in the near term.
- Further confirmation of a deeper dive in prices is in the increase in volume as prices started moving lower.
December Crude Oil
- Crude prices have shown considerable weakness over the past two weeks since the onset of the Israel-Hamas conflict.
- The downward price action was met with a considerable increase in volume, indicating that there are more sellers coming to the market than there are buyers.
- Seasonally, crude oil prices tend to move lower in the winter months due to softer demand.
Good afternoon, traders. This is Matthew Bresnahan with Blue Line Futures coming to you from the Chicago Board of Trade with today’s edition of the two minute drill, where we will be covering the February live cattle contract and the December crude oil contract. So let’s get this clock rolling. Okay. On October 20th here I was Friday, we had the cattle on feed report and placements came in a lot higher than expected in Monday’s trade sign out of not only a gap lower, but a limit, a locked limit down move.
Since then, you know, we’ve we’ve had a modest recovery, but as you can see, the velocity of that move is starting to slow down here. And like if you look at the positive directional movement indicator here, you know, we can see that prices are still going up, but the rate of acceleration in which prices are going up has materially slowed down.
So what does that mean? Now, if we look at this red line here, that is the 200 day exponentially weighted moving average that acted as some support here. You know, following the move lower. But, you know, this slowdown in velocity and the you know, directional movement indicator rising showing that the market is you know the market’s propensity to trend is rising suggests that we may actually have another leg lower headed our way soon.
Next, let’s jump into the December crude oil contract. So it’s been a little volatile lately, but if you look at it, we have, you know, lower highs and now lower lows. And it’s corresponded with increasing volume with these moves to the downside. And, you know, seasonally, this is a bit of a tough time for the crude oil contracts as demand typically wanes in the winter months.
But a lot of the rally that we had, you know, in the early part of October stemmed from the conflict in the Middle East currently unfolding. And, you know, seasonality is starting to play a factor. If we look at the five, ten and 15 year seasonal tendencies for crude oil, it typically tends to move lower in the month of November.
All right. We are a little bit ahead of the gun here and in only one minute and 51 seconds. But thank you for watching. Give us a like and subscribe.