Live Cattle (Cash Index): The cash market remains in a major (long-term) uptrend, though it did post an inside range during May. Monthly stochastics established another bearish crossover above the overbought level of 80%, a signal the major trend could soon turn down. The most logical reversal pattern going forward would be months of consolidation leading to a new 4-month low. Theoretical Positions: Traders would likely be long the market with a stop below the previous 4-month low of $156.00 (February 2023). Hedgers have likely continued to roll put options up.
Feeder Cattle (Cash Index): The cash market extended its major uptrend to a high of $209.86 during May. The market remains sharply overbought, with monthly stochastics establishing another bearish crossover above the 80% level, a signal the trend could turn down. Theoretical Positions: Traders are likely still long the market. Sell stops would be placed below the previous 4-month low of $180.37 (February 2023). As with live cattle, hedgers have likely continued to roll put options up.
Lean Hogs (Cash Index): The cash index moved into a major uptrend during May as it posted a new 4-month high above $80.o1. This confirmed the bullish crossover by monthly stochastics at the end of February 2023, and coincided with another bullish crossover at the end of May. The initial upside target is near $90.70, the 38.2% retracement level of the previous downtrend from $122.25 (August 2022) through the low of $71.18 (April 2023). Theoretical Positions: Traders might’ve gone long the market near $80.02, or at the May settlement of $80.08, on the move to a new 4-month high.
