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.
JULY 20, 2020
CORN, CATTLE, FEEDERS STAY BULLISH COPPER OVERDONE
On May 20th I posted an article in which I discussed the likelihood of Cattle reversing the trend to bullish https://www.ifgfutures.com/cattle-special-report/. Cattle did reverse the trend then fell into a rather sluggish sideways trend threatening to go bearish on last Friday’s close which I addressed in the article of July 14 https://www.ifgfutures.com/special-report-the-three-cs-corn-copper-and-cattle/. For those that have read that article please recall three bits of information. First, a close last Friday at or below $100.20 would have turned August Cattle bearish. Secondly, it was my opinion that when a commodity comes close to changing a trend and fails the underlying trend may well became more dramatic. Cattle were in Red Alert status last week meaning there was a greater chance of a dynamic move. On Thursday August Cattle jumped a $1.97 closing at $103.27 both Thursday and Friday. August Cattle will have to close at or below $97.82 on Friday to turn bearish. Be advised I have gone to the October Cattle as of today.
Moving to October Cattle the Model tells us that October Cattle are in an uptrend. October Cattle will need a close at or below $100.35 on Friday to turn bearish. Both the Positive and Negative Indicators are within the first standard deviation of the long term average.
What to do? I have missed getting long Cattle because I was looking for a larger set back that never came. I am going to be a bit more aggressive and try and buy at $105 to $104.50. But beware as the old saying goes there is no one more bullish than a sold out bull, so take that into consideration.
While August Fat Cattle turned bullish in late May, August Feeder Cattle lagged behind by over a month turning bullish on July 10. Then last week August Feeder Cattle rallied $7.00 week over week and in my opinion helped lift Fat Cattle above the trend changing value of $100.20.
What do we know? August Feeder Cattle are in an uptrend. It will take a close this coming Friday at or below $131.00 to turn August Feeder Cattle Bearish. The Positive Indicator is above the second standard deviation of the long term average.
Corn avoided going bearish with a six cent rally late last week. If you have not read last week’s letter you can go to https://www.ifgfutures.com/special-report-the-three-cs-corn-copper-and-cattle/to catch up.
What do we know? December Corn is in an uptrend. It will take a close at or below $3.32 on Friday to reverse the trend. If it fails to go bearish on Friday the critical price will be $3.32 ¾ on July 31.
What to do? Click on hyperlink above to see trade comments.
Last week I wrote about Copper and suggested counter trend selling https://www.ifgfutures.com/special-report-the-three-cs-corn-copper-and-cattle/. As I stated at the time I sold too early at $2.93 c’est la vie, but thankfully was able to liquidate at $2.90, too early again double c’est la vie. The Positive Indicator which was above the third standard deviation of the long term average has retraced to being above the second standard deviation of the long term average. This tells us that September Copper remains over stretched to the top side and to continue to look for rallies for quick counter trend short sided trading opportunities.
What to do? I will be watching the $2.95/2.98 levels as potential areas to get short.
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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 Groupspecializes 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.comor 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.