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.
ARE CATTLE MOOOOOVING LOWER?
September 23, 2020
The December Cattle market has been in an uptrend since May 22. It has rallied over $24.00 from April 6 to a high made on the 19th of August. The move was choppy and gradual with protracted periods of a choppy trade. So what does the Model tell us now?
By strict definition December Cattle remained in an uptrend as of the close of September 18, but a warning shot was received across the bow. We know according to the Model that both the positive and negative indicators are within the first Standard Deviation of the long term average. We know that Friday last December Cattle closed at $111.85 (the Model is based on week ending closes). The Model also tells us that IF December Cattle close at or below $110.70 this Friday, the 25th December Cattle will reverse to a downtrend. As of this writing December Cattle are trading at $110.17. There is plenty of time between now (Wednesday) and Friday for December Cattle to rally above the $110.70 level but without a measurable rally December Cattle will remain in a precarious state. So what is a measurably rally that will buy December Cattle time? A close at or above $113.70 on Friday, September 25 will go a long way in relieving near term pressure on December Cattle. The prices listed below are the critical Friday price levels I will be watching.
September 25 $110.70
October 2 $109.32
October 9 $111.55
October 16 $110.07
What to do? If you are a Bull and believe we are in for a week ending rally you want to try and buying a dip at $109.70. If you are a Bear you can look to sell a rally at $111.45 abd hope for a week ending dip. As for me I will wait for Monday.
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 at [email protected]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.
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.