For live cattle, the last high of significance prior to the current decline was August 10.
The oscillator rose above the zero line at that time and moved $9.70 from the contract low.
From that $116.65 high, December fell initially to $101.27 before correcting. That was a $15.37 move.
The correction took December back to $108.90 before resuming the downtrend to the next contract low of $98.90 for a $10.00 move. December rallied briefly to $103.82 before resuming the downtrend again to where we are this morning.
So far, this move has been approximately $6.50.
If December falls below $93.82, it will suggest we should anticipate further downside movement.
At this time, the second move down was 65% of the first. The current move down of $6.50 is 65% of the second move. I understand this does not mean a great deal at this time, but it is the only clues we have available with support-price levels eroding and seemingly conflicting supply/demand data.
I continue to perceive risk of loss to be as elevated as it has ever been in the cattle, regardless of position.
In the feeder cattle, the May $120.00 call is trading under $4.00 this morning. That is $14.00 to break even as I write this.
The contract high for May is $135.50. On the weekly continuation chart, $150.00 is the last high of significance before breaking lower. Due to the current down move perceived a fifth wave, and all of the sideways to downward slant trading this year a wave four, it leads me to anticipate a rally of significance when the market turns.
At this time, the fifth wave has a contracting pattern unfolding, like the fats. I fully understand the reluctance to want to buy anything cattle related. However, that is exactly what I perceive you should do. I recommend buying the May $120.00 call at $4.00 or better. (This is a sales solicitation.)
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