Not only have traders digested the supply news from the recent reports, they have formed it into what appears to be a formidable base.

On the live cattle chart appears the wave 2 may have found the low tic for some time to come. However, it may not be complete to the point in which new highs should be anticipated just yet.

I continue to view the back months as having value due to the severity of the discount. Unless you anticipate cash fat cattle to be trading at last fall’s low of $98.00, and intrinsic value somewhere actually north of $108.00, then the futures remain undervalued in my opinion.

On the feeder cattle chart, I missed an important factor on the "Shootin’ the Bull" commentary Wednesday.

The March contract gapped down on Wednesday's opening. While there is no air within the gap, March opened lower than the close of Tuesday. With today's gap higher opening, it sets the stage for a "morning star" pattern on the candlestick charts. This will be confirmed at the close today, were the March to close above the real body (open/close) of Wednesday's trade.

A stronger signal would be if this materializes with today's close being higher than today's open as well. This pattern is also noted on the April fat cattle.

Therefore, with the feeder cattle market having a slightly different wave count than fats, it appears to me that the sell-off, and not trend, is coming to an end. Like the fats, this does not necessarily suggest prices will rally, but in my opinion, diminishes the likelihood of moving significantly lower.

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. Past performance is not necessarily indicative of future results.