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(September 24, 1997) FEEDER CATTLE: SHORT TERM–Carryover selling from the cattle pressed the feeders. Concerns over the prospect for higher corn prices also weighed on the market. The chart is also encouraging a negative attitude.
LONG TERM–There are tight supplies of feeders. While this is obviously bullish to feeders, it also suggests a tightness in live cattle in December, February and April contracts. Traders should begin to focus on feeders and live cattle as having good potential. However, as a negative, feeders need to see improved deferred cattle prices, or in the real world of cash markets, it isn't possible to make much of a profit.
RESISTANCE–Resistance basis October remains near 8040-8060, 8100, 8150-8170, the low 8200's, 8250, and the 8290's.
SUPPORT–Support basis October is near 7950-7980 (current levels), 7860 or so, 7800 and the low 7700's.
RECOMMENDATION–Aggressive traders might sell October feeders on 50-100 point rallies or near the 8075-8100 area with 50-100 point stops or under 7950. Objective is open. Option traders should stay on the sidelines.
M. Steven Morgan
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Last updated on 09-28-97
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