February live cattle (LEG27) futures present a buying opportunity on fresh price strength.
See on the daily bar chart for February live cattle futures that prices have sold off sharply recently, on technical selling pressure. However, the market has become technically short-term oversold as the Relative Strength Index has dropped below 30.0, as seen at the bottom of the chart. That suggests a price rebound is due soon and that a market bottom may be in place. Importantly, the cattle futures markets in recent months have shown keen resilience and rebounding ability on big price selloffs. It’s my bias that such will occur again, and sooner rather than later.
Fundamentally, historically tight U.S. beef supplies are combining with still-solid consumer demand for beef at the meat counter. That continues to be a firmly bullish fundamental situation for the cattle futures markets.
A move in February live cattle futures above chart resistance $226.75 would give the bulls some momentum and it would also become a buying opportunity. The upside price objective would be $245.00, or above. Technical support, for which to place a protective sell stop just below, is located at $220.00.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.