The Cattle Range Home Page
September 15, 2017
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. ."Shootin' the Bull" Weekly Analysis

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"Shootin' the Bull" Weekly Analysis

In my opinion, this week continued with the attempt to right the boat.  Although little confirmation was created from technical indicators or price movement, the slight bit of optimism created by producers resisting lower bids helped considerably.  As I write this, I've still not seen a cash trade, so this may all sound foolish or really smart by the time you read it Saturday morning.  Nonetheless, the division of time appears to be the most noticeable.  Weak still in the front end, firmer in the back and feeder cattle moving higher.  A trade higher in cash will be anticipated to turn the tide for some time to come.  Potentially it won't make for a rally of significance in the October, but would be anticipated to continue the back months higher.  Next Friday's on feed report should help to clarify some changes in the trend of placements.  With June a peak at 16% over and July only 2% over, there is no telling what August will be. 

I continue to believe that the hard pull on inventory all year long has changed the dynamics considerably.  It will take time to visualize this changes as they are slow in coming.  However, by December I would anticipate statistician's to have a good handle on the changes and what it means for the year of '18.  The futures market is current suggesting there will be fewer cattle to choose from.  A great deal of psychological warfare has been played out this week.  It is perceived that whomever tipped their hand first was the weaker of the sides and price would be determined upon that.  This determination would be viewed as the resuming of the down trend, or a staunch reversal of.  
 
Feeder cattle remain the clean cut and dry market.  The breaking out of the triangle last week, congestion this week and close at the top of the congestion, leads me to anticipate further upside movement.  January feeders are well within striking distance of contract high. The oscillator is back above the zero line on the daily and I have begun tracking the January movement on the hourly to help depict the unfolding of the wave count.  At present, we have an initial move up from where I perceive the wave 2 terminated. With oscillator readings positive, this market should continue higher without coming back and breaking downside support.  At this time, I believe the termination of the January major wave 2 is at $140.45 made on 9/6. I do not want to see this low exceeded.  From $140.45, traders pushed January up to $147.35 for what is believed to be a minor wave 1.  Minor wave 2 went back and forth until confirmed complete on Friday when January traded above $147.35.  The oscillator on the hourly chart has mimicked the move higher and lower.  

The interesting part is that on the lower end of trading, the oscillator did not move back below the zero line.  Therefore, were the oscillator to push to a new level, with the price at a new level, it would suggest a minor wave 3 was in progress and to anticipate an upside target to approximately $157.00.  The cash market is what continues to impress the most.  The feeder cattle index broke above a previous low last week and is less than $2.50 from the b wave high at $151.99.  Were the index to merely climb back to its previous high of $154.91, it makes the target on the January contract to be not that big of a stretch. I remain incorrect on my grain analysis.

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Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

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.

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