Live Cattle (February)
February live cattle sprang higher on Friday, the first day of the seasonal trade we outlined last week; buying on December 15th and selling on December 29th has been profitable for 15 of the last 15 years with the average gain being roughly 3.00. A strong seasonal trade coupled with a wave of positive trade headlines led to broad-based buying in the agricultural markets. The cash trade started at 118-119 early last week but managed to firm up in the North on Friday, 120.50. All these positive helped lead to a breakout to new contract highs on Friday. The lack of follow-through to start the week was unexpected. Previous resistance now becomes support, we see that as 126.925-127.15. A break and close below here could take us back to the low end of the recent range, 123.125-123.85. With the market near contract highs we are in uncharted territory, so finding meaningful resistance becomes more of a fool’s errand. Friday’s Commitment of Traders report showed funds bought 2,800 contracts through December 10th, expanding their net long position to 81,013.
Feeder Cattle (January)
January feeder cattle broke out above technical resistance on Friday, we defined that as 143.275-143.70. The move out above here was on heavy volume which encouraged additional buying and pressed prices right up against our next resistance pocket which we have had defined as 146.85-147.975. The lack of follow-through today was a disappointment for the bull camp but that doesn’t mean the rally is over. 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.
Support: 143.275-143.70****, 141.50-142.00**
Lean Hogs (February)
February lean hogs managed to rally back above the 70.00 handle and maintain that strength into the afternoon, posting their highest close in a month. Today’s price action is extremely constructive, but the bull camp needs to see follow-through. Previous resistance now becomes support, 69.325-70.05. First resistance comes in from 72.025-72.275, this pocket represents the 50 and 100-day moving average. If the bulls can chew through this pocket, we would expect to see a continuation towards 73.95-74.35. This pocket represents the gap and the breakdown point from November 14th, along with a key retracement.
Resistance: 72.55-72.850**, 74.00-74.525****
Support: 69.325-70.05****, 65.40-66.50****, 63.675**
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.