Live Cattle Futures have gained in four of the last five days after losing a huge chunk on the four days leading up to the recent stretch of rallies. Though the market has seen four rallies in the last five days, it only rallied 0.2% in that stretch as it closed Friday at $94.025. Small Traders are net short, but they may be switching their position soon.
Q: How has Chicago Mercantile Exchange live cattle futures responded to a series of small gains (four in five days) while small traders are net short?
A: According to the eight previous occurrences of this event omitting any repeat occurrences within 20 trading days, EventEdge indicates that live cattle has shown a very strong bullish edge that peaks 13 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the most recent occurrence of the event (Friday, Dec. 7, 2007) is Thursday, Dec. 27, 2007.
Cattle rallies in 100% of the cases (8 of 8) by an average of 3.5% relative to the close on the event date. The overall return of the eight cases is 3.5%, which, based on the close on the event date ($94.025), provides a target price of $97.316.
If you would like to see more details of this historical edge, go to www.markethistory.com
Mickey Schoenhals is an analyst with Markethistory.com.
