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Are the Lows in for Cattle, or was Friday Just a Dead Cat Bounce?

Livestock Round Up

/ by BlueLineFutures | Leave a comment

Cattle futures were under heavy pressure for much of last week but staged an impressive rally on Friday. Are the lows in or was that just a relief rally following a sharp selloff?

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Live Cattle

Technicals (October – V)

October live cattle managed to stage an impressive rally on Friday, with prices rallying and settling just a tick off the upper end of our first resistance pocket at 181.175. This will now act as our pivot pocket to start this week’s trade. If the Bulls can find follow-through buying early on in today’s trade, the next upside objective we see comes in from 182.675-183.275. Consecutive closes above this pocket could neutralize our “sell rallies” bias.

Resistance: 182.675-183.275* Pivot: 180.575-181.175 Support: 179.35-180.50**, 176.35-176.22

Daily Livestock Summary
Friday afternoon’s cutout values firmed with choice cuts .59 higher to 312.71 and select cuts up .56 to 298.59. The 5-area average price for live steers was reported at 191.43, which is still at the upper end of this year’s range. Daily slaughter was reported at 104k head, 12k head less than the previous week. Weekly slaughter was reported at 588k.

Below: Daily chart of October live cattle which illustrates the accelerated selling pressure following the breakdown of trendline support. Also included is a set of Fibonacci retracements from the high to low of the recent move.


Chart of Interest
There’s been a lot of comparisons in the grain markets this year VS 2014, so just for fun, we thought we’d take look at a year of interest for a cattle comparison, that being December 2015, which aligns with the old contract highs that were set in late 2014. Below is a look at this year’s December live cattle contract (black line) VS the December 2015 contract in the green line.

Commitment of Traders Update
Friday’s Commitment of Traders report showed Managed Money, aka Funds, were net sellers of about 21k futures and options contracts, with 20k of that coming from long liquidation. That drops their net long position to 58,348 contracts, the smallest net long position in about two months.

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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