If you go back to 2008 the markets that sold off the most were those that had made extreme moves and new historic highs, such as the grains, some currencies and crude (NYMEX:CLU14), as examples.
Cattle (CME:LEV14) and feeders sold off in 2008 too, even though they were at low numbers in comparison to today so the dollar did influence them. So considering the extreme moves we have witnessed in these two markets this year, does that make them more vunerable to a major correction now if the dollar is bottoming again?
Cattle and feeders are now attempting to top again. This current attempt at a top is not their first. The last attempt was in July but that failed. The fundamentals for cattle/feeders has not changed since then but one thing has. The dollar. In July the dollar was still stuck in its range long term. It no longer is and appears to be breaking out to the upside. Considering the extreme move seen in the cattle/feeders, we have to ask will this one change, assuming it follows through, be enough to push them over the cliff, so to speak?
Everyone is waiting for the fundamentals to change, for the herds to be built up again, etc.,etc. But maybe that isn't the key afterall.
The move seen in both cattle and feeders amazes all of us but if one can remove themselves from the emotion of it and simply compare it to the move seen in a lot of commodities prior to the 2008 crash and burn, there really isn't much difference. The character of their move is no different than what we saw in other markets at that time. Technically could that make cattle/feeders as vunerable to a major selloff comparable to what other markets experienced in 2008 for the same reason that triggered the end of those bull moves: the bottoming of the dollar?