Several weeks ago we addressed the Cattle and Feeder Cattle markets. Since that time those markets have experienced a good degree of volatility. According to the LAWG (LAWG) 647 Model this volatility has brought us to an extremely important time in determining whether the trend(s) in Cattle and Feeder Cattle will remain bullish, or reverse course and head lower.
MARKET FACTORS, WHAT DO WE KNOW
- Cash price for Cattle and beef products are under pressure
- Fund buying helped take it higher selling now taking beef markets lower
- Packers bought ahead for the near term
- Markets expecting increased numbers
WHAT DOES LAWG TELL US
As of last Fridays close both August Cattle and August Feeders by definition remained in an uptrend. Both markets went to LAWG RED ALERT STATUS. This tells us that according to LAWG there is a very good chance for increased volatility and potential trend confirmation.
CRITICAL LAWG VALUES
August Cattle turns bearish on a close this Friday, June 30 at or below $112.77 August Cattle are trading at $114.72 as of this writing. If August fails to turn bearish on June 30 the critical level used to determine the trend moves to $120.05. I will not know the actual LAWG reversal price for July 7 until I have the actual close on Friday, June 30. A close this Friday at or above $119.67 will reconfirm the uptrend.
August Feeder Cattle turns bearish on a close this Friday, June 30 at or below $142.25 August Feeder Cattle are trading at $144.12 as of this writing. If August fails to turn bearish on June 30 the critical level used to determine the trend moves to $154.70. I will not know the actual LAWG reversal price for July 7 until I have the actual close on Friday, June 30. A close this Friday at or above $154.95 will reconfirm the uptrend.
WHAT TO DO?
If one has the brass and can the cash one can look for levels to but either or both. As I have stated before if an LAWG trend change value become close to present values and fails to execute a trend change it has been my observation that the ensuing market move in the direction of the confirmed trend can be dynamic. Otherwise wait for the next week or so and see what the market brings.
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.