wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 21, 1997) CATTLE: SHORT TERM–Profit-taking by longs that wondered if they were ever going to get above water again pressed the cattle after last week's strong rally. Cash is expected to remain firm for the near future. There are also worries that a winter storm will sweep through the Plains next week. This will contribute to lower weight cattle and the potential for death loss due to the storm. Some traders suspect that cash has put in a near-term low, as retailers have begun buying in advance of the holiday season. Seasonal patterns would tend to support that line of thought.
RESISTANCE–Resistance basis Dec. lies near 6780, 6825, 6850-6875.
SUPPORT–Support basis Dec. lies near 6757, 6720, 6700, 6647, 6600, 6550-6525.
RECOMMENDATION–The Dec. chart is beginning to take on a more positive aspect. Friday's action suggests a near- term low is in and a rally is under way to at least the mid 6800's, possibly as high as near 7000. If aggressive, buy Dec. cattle near 6750-6780 with 50-100-point stops, looking for a rally to the mid 6800's. Option traders should stay on the sidelines for now. Long- term players could consider buying the April cattle on 50-100-point dips from current levels with stops of 100-150 points. Objective is open. As regular readers of mine know, I seldom recommend spreads. However, floor talk is that the April/August spread is an excellent buy at current levels. Use 100-point close only stops and look for April to gain on the August. Objective is 500 to the April, although some traders are looking for 800.
M. Steven Morgan
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