RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday’s break below Mon’s 126.05 initial counter-trend low leaves yesterday’s 129.625 high in its wake as a smaller-degree corrective his the market now needs to sustain losses below to expose a larger-degree peak/reversal-threat environment.  Its failure to do so would render the relapse 04-May’s 134.55 high the 3-wave and thus corrective affair we believe it to be and resurrect the broader bull.  In this regard 129.625 is considered our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can be objectively based and managed.

Live Cattle 60 min Chart

Live Cattle Daily Chart

Stepping back to consider this market’s longer-term uptrend in the daily (above) and weekly (below) log scale charts of the Jun contract, this week’s not unexpected relapse is thus far of an insufficient scale to conclude last week’s 134.55 high as the end of the bull.  Given the magnitude and accelerated nature of the past month’s portion of a 7-MONTH rally, commensurately larger-degree weakness below 24-Apr’s 114.425 larger-degree corrective low remains required to break the uptrend.  In effect the market is sitting pretty much in the middle of the range bounded by its two key technical levels at 114.425 and 129.625.

For a new bearish count the market needs to stay below 129.625.  For a still-advised longer-term bullish count the market needs to stay above 114.425.  Our long-term bias remains to the bull side.

Live Cattle Weekly Chart

The weekly log active-continuation chart below shows the market’s return to former key 121-handle-area resistance from Jan’17 that, since broken in late-Apr, now serves as a new support candidate.  This weekly chart also shows continued historically frothy levels in our RJO Bullish Sentiment Index that we have maintained for months will ultimately contribute to a major PEAK/reversal condition, but only after the market stems the clear and present uptrend with a confirmed bearish divergence in momentum.  The jury is out on whether yesterday/today’s failure below 126.05 is of a scale sufficient to do this.  We do not believe it is.  That said, for those who want to conclude a peak/reversal count now, the market has identified 129.625 as a tight but objective risk parameter from which to do so.

In sum, a neutral/sideline position is advised for shorter-term traders.  Longer-term players are advised to pare bullish exposure to more conservative levels and jettison the position altogether below 114.425.  A recovery above 129.625 will render this week’s sell-off attempt a 3-wave and thus corrective affair and re-expose the major bull to new highs above or around 134.55.

Live Cattle Weekly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.