Be advised that all my comments are my OPINION and that OPINION is based on my long term in-house model that I dubbed LAWG 647. The prices I use in my model are week ending prices, usually Friday.BTW, trading commodities is risky and not meant for those that faint at the sight of blood.
September 30, 2020
WHY YOU SHOULD BE WATCHING THE FEEDER/FAT CATTLE MARKETS?
I authored an article on Feeder Cattle and Fat Cattle two days ago. Normally I do not follow up with another article on the same topic so quickly but market action compels me to take another look.
If you have not read the article of September 28, I suggest you may find it helpful to give it a look.
It is my opinion that the recent Fat Cattle rally was energized by Feeder Cattle finally joining the uptrend parade. Ergo, I am paying special attention to the November Feeder Cattle market in an effort to foretell what might happen in the December Fat Cattle market. Let’s get down and dirty and go right to what the LAWG647 Model tells us.
November Feeder Cattle are in a downtrend. It will take a close this Friday, October 2 of $144.80 to reverse the trend to bullish. Yesterday, Tuesday the 29th of September November Feeder Cattle closed at $143.77, with a high of $144.55.
December Cattle are in a precarious uptrend needing a close at or below $109.32 on October 2 to turn bearish. Be mindful as I stated in the earlier article according to the Model a close at or above $112.57 will re-confirm the bullish trend in December Fat Cattle. Yesterday, Tuesday the 29th of September Fat Cattle closed at $113.12, with a high of $113.55.
Closing Thoughts
As I mentioned in earlier articles it is my opinion having used the Model for many years if a commodity becomes very close to a trend reversal and fails the underlying trend normally gains significant energy. That is not however an absolute certainty and again it is my opinion. What is interesting is that Feeder Cattle are close to going back bullish and Fat Cattle are close to going bearish. I think we could see pretty good volatility over the next several days as these markets try and determine which way to flop. We will also be mindful that both markets kick the can down the road to next week.
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Lee Gaus is a founding partner of EFG Group founded in 1992 which specializes in servicing Introducing Brokers. Prior to founding EFG Group Lee Gaus, Tom Fritz and Steve Erdman all began their Commodity Futures careers with ADM. Collectively Lee, Tom and Steve have over one hundred years of experience in the industry.
International Futures Group (IFG) founded in 1994 is a sister company to EFG Group specializes in serving institutions, professional traders and individual investors.
We believe our experience and the development of the Model provide our clients, Introducing Brokers and individual clients a unique perspective. If commodity trading is what you do drop me a line atLee@efggrp.com or give me a call at 312-384-1166, or 1-877-304-1369. We will be glad you called and are confident so will you.