Live Cattle Futures (CME.LC) dropped -0.7% on its fifth successive decline during Thursday's session to close at 89.95¢. The total percentage loss over the five days was a 'very large'* -5.2%. Moreover, Live cattle closed below its lower Bollinger band (20-day, 2 standard deviation bandwidth) for the third day in a row. Even worse, cattle crossed below its 52-week lowest low; sinking to an intra-day low of 89.90¢. Is it time for the bulls to awaken?
* Five-day percentage loss is more than two standard deviations stronger than the average five-day percentage change measured over the last 30 trading days.
Q: How has CME.LC performed in the past, omitting repeat occurrences within 10 trading days, when while trading at a 52-week low, it records a 'very large' five day decline and closes below its lower Bollinger band?
A: According to the 11 previous occurrences of this event, EventEdge indicates that CME.LC has shown a very strong bullish edge that peaks 12 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Thursday, March 6, 2008) is Tuesday, March 25, 2008.
CME.LC rallies in 91% of the cases (10 of 11) by an average of 5.2% relative to the close on the event date. The average of the one decline is 1.2%. The overall return of the 11 cases is 4.6%, which, based on the close of CME.LC on the event date (89.95¢), provides a target price of 94.088¢.
If you would like to see more details of this historical edge, go to www.markethistory.com
Ronish Patel is an analyst with MarketHistory.com.
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