Live Cattle (February)
February live cattle crashed lower on Friday, testing and holding our 3-star support pocket from 123.125-123.40. Today they erased all of Friday’s losses and at one point erased all of Thursday’s too, testing our 4-star resistance pocket from 125.775-126.30. This pocket represents recent highs and contract highs marking a double top, so long as the bears can continue to defend this pocket. Friday’s Cattle on Feed report was slightly friendlier than expectations, this coupled to the stock market at all-time highs helped fuel today’s rally. Friday’s Commitment of Traders report showed funds added 7,834 contracts, expanding their net long position to 81,549. Cash trade last week was steady to moderately firm, nothing to write home about. We are right around the corner of seasonal trade, which is selling February live cattle on November 27th and buying it back on December 11th. This has been profitable for 14 of the last 15 years with the average gain being 2.70 or $1,080. Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed to you each day.
Feeder Cattle (January)
January feeder cattle cracked lower on Friday, taking prices into our 4-star support pocket from 138.65-139.00. With technical indicators shifting, that support pocket shifts to 138.025-138.85. Today, January feeder cattle gaped higher and didn’t look back, offsetting Friday’s losses and testing our resistance pocket from 142.225-143.15, previously support. We believe the bears have the advantage until the bulls can achieve consecutive closes back above resistance.
Resistance: 142.225-143.35***, 146.85-147.975****, 152.25-152.80**, 159.725****
Support: 138.025-138.85***, 133.60-133.95****
Lean Hogs (February)
Increased domestic pork production has been keeping a lid on rallies but we could see that start to shift in the new year. African swine fever continues to be a concern and it is estimated that global production could see as much as a 15% decline in 2020. There is a bearish seasonal trend right around the corner, that is selling February live cattle on November 29th and buying them back on December 17th. This has been profitable for 14 of the last 15 years with the average gain being 2.39, or $956. Friday’s Commitment of Traders report showed sold nearly 7,000 contracts, trimming their net long position to just 1,546 contracts. Please sign up for a Free Trial at Blue Line Futures to have our entire technical outlook, actionable bias, and proprietary levels emailed to you each day.