Recall from previous discussions continuous monthly livestock charts are not my favorite studies for a number of reasons.
Live cattle remain in a major (long-term) downtrend, with the continuous monthly chart made more interesting by the expiration of the April contract and roll to June Friday. Before expiring, the April contract had completed a double-top with its high of $144.225 (April 21) before going off the board at $141.90. June closed the month at $132.65, below the March low of $133.50. June’s close completed:
- The long-term double-top pattern
- Putting the downside target at $122.925
- A test of the 38.2% retracement target near $120.15
- A new 4-month low close below the previous mark of $133.50 from March
- Again confirming a major downtrend signaled by a bearish crossover by monthly stochastics at the end of February
- With bearish fundamentals, indicated by futures spreads, projecting a target of $112.75 to $105.40.
- A close below the major uptrend line calculated at $132.925 during April.
Feeder Cattle remains in a major (long-term) downtrend with the downside target near $136.70. This price marks the 50% retracement level of the previous major uptrend from $103.95 (April 2020) through the high of $169.375 (February 2022). The February high was part of a bearish key reversal that confirmed the bearish crossover by monthly stochastics above the overbought level of 80% at the end of January 2022.
Lean Hogs still look to be in a major (long-term) downtrend, with the lightly traded May issue closing the month of April at $100.90. This was just below the April contract’s close at the end of March at $101.75. This completed a bearish outside range on the continuous monthly chart, indicating Wave B (second wave) of the 3-wave downtrend has peaked. If the market has moved into Wave C (third wave), then it would be expected to take out the Wave A (first wave) low of $70.20 (December 2021). Deferred futures spreads continue to show neutral-to-bullish fundamentals, though strong commercial selling was seen in the June-August to close out the month.