December live cattle futures at the Chicago Mercantile Exchange last Friday notched a fresh contract low of $91.30. Price action Monday and Tuesday morning did see a short-covering bounce in a market that is still firmly in the hands of the bears, on a short-term technical basis. Live cattle futures remain in a 14-week-old downtrend on the daily bar chart, from the late June contract high of $115.25.
The next downside price objective for the bears is to push and close December live cattle futures below technical support at the contract low of $91.30. Below that lies solid chart support at $90.00. On the upside, chart resistance for December cattle futures is located at this week’s high of $94.25 and then at $95.00.
For the bulls to regain upside near-term technical momentum to suggest that a market bottom is in place and that prices can sustain an uptrend, they will have to fill on the upside a downside price gap created on Oct. 6. That means pushing prices back to the $97.50 level. Seasonality studies do show cattle futures prices tending to trend lower from the August timeframe into the December timeframe.–Stay tuned!–Jim Wyckoff