The cattle charts are starting to get that Swiss cheese look, with gaps above and below the market.
Cattle markets have seen a choppier trade over the last week, right instep with the outside markets. With that said, there were some caution signs popping up with yesterday’s price action.
Outside Markets & Headlines
Outside markets have been choppy in the overnight trade, but stock indices are currently trading near unchanged. With that said, there’s a jittery feeling to the markets as participants become keenly aware that we are one unpredictable headline or social media post away from a big move in either direction. In other markets you see crude oil on the firmer side, the Dollar higher, grains higher, and metals softer.
Live Cattle (April)
April live cattle gapped higher yesterday, but didn’t really tack much on after that as the market lingers near the 100-day moving average. There are now gaps below and above the market, and we wouldn’t be terribly surprised to see a gap today. Though cattle were higher yesterday, the price action didn’t provide the “coast is clear” vibes, especially when oil was on the lows, stocks on the highs, and cattle flat to lower from the initial open. Until the market is able to get back out above the 20-day moving average which coincides with trendline resistance and a lower high, we feel that the Bears have the advantage with seasonal weakness and economic uncertainty providing the edge. Tehcnical support and resistance levels remain intact from yesterday’s writeup.
Yesterday’s choice cuts were 3.38 higher to 394.67, select cuts 3.15 higher to 386.77. Cash trade was mute yesterday.
Resistance: 233.67-234.00***, 236.88*** 238.27****
Pivot: 232.02
Support: 228.85**, 227.32**
Fund Positioning
Friday’s Commitment of Traders report showed funds were net sellers of 4,919 Futures contracts, shrinking their net long position to 112,044 (still historically large).
Seasonal Tendencies
Below is an updated look at historical price averages over different time frames, 5, 10 ,15, 20, and 30 years. Historically, we are entering a weaker time of year for prices, whether or not that plays out again this year or not is TBD. Seasonal studies are just another tool in the toolbox, but if you have physical risk, it may be enough of a reason to consider protecting price from these levels.
