The tension is such you can cut it with a knife. Bearish mentalities are exhausted. Although there may still be a wall of cattle coming, they didn't come in February and they aren't anticipated to have in March, so it has to be April and or May to increase numbers to a point in which it begins to impact packing capacity.

Aggregation of the basis remains the objective and with spreads still $10-plus and widening, there is a great deal of work left to do. The looming on-feed report leads me to perceive most of the price action for the day is done by late morning.

The most recent price action has helped considerably in deciphering the next most probable move. Were the June futures to trade under $114.85, it will lead me to anticipate a correction of the same magnitude as the rally from $108.67 to $117.57. Hence a 50% retracement would put June back to approximately $113.12. I know that seems hard to believe with the discount to such a strong cash market. However, not much can surprise me as the oddity of the basis spread itself remains beyond explanation.

Were traders to hold the $115.80 low of Thursday, and then set a new high above $117.57, it would suggest the up move remains intact. A trade under $115.80 today would begin to cast a shadow of doubt for much higher trading until the correction has formed. All of the other months have set a new high in price with a new high of the oscillator. This leads me to believe that upon completion of a correction, the August and out months will be anticipated to continue aggregating the basis with futures moving higher.

Basis is working exactly opposite from fats cattle in the feeders. With producers now able to sell inventory for higher in the future, it leads me to anticipate an uptick in the selling. This is likely to create the correction. A trade under $140.87 August will suggest the correction is underway.

I will then look for retracement levels down around the $138.00 area for August. When complete, further upside movement will be anticipated.

Due to the higher price being complimented with the higher oscillator reading, I do not anticipate this friendly environment to subside just yet. A great deal of changes are in progress and this has caught many by surprise, except you. Were traders unable to push August below $140.87, and a new high above $145.55 materializes, then the primary wave 3 will still be in progress with the $153.00 target eyed. 

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