Open interest plummeted yesterday. The decline of more than 6,000 contracts is in stark contrast to Friday's increase of more than 4,000.
This is indecision on top of indecision. The current pattern brings out the "ifs" in full force. If this rally is like all the rest, then new contract lows would be anticipated.
If this rally is the fledgling first wave up, then further upside potential is anticipated.
The subtle changes in the fundamentals leads me to anticipate further upside potential. The wave count and technical indicators lead me to anticipate further upside potential.
A new low would lead me to perceive there is something else out there that is either unknown, or only known by a few.
Nebraska has become the elephant in the room. Multiple analysts are attempting to find an end to the heavy cattle coming out of Nebraska. As in most cases, it is the few that make it more difficult for the mass.
Higher corn prices will help this and the apparent brow beating Nebraska cattlemen are getting may help to turn their production stance. It does not appear that it would take much to tip the scales with the fewer numbers.
Last, the low on Monday is just 20 cents from a 62% retracement level on the February contract. Not necessarily the specific price, but February will need to hold the $101 area in order to continue to anticipate a higher trade.
Risk is elevated. With the election results Wednesday anticipated to create significant volatility in equity and financial markets, I recommend being overly cautious until traders have had time to digest what the next four years will look like.
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