February 28, 2024

 I believe that Cotton will likely trade MUCH, MUCH HIGHER but with the last few days of action, and having had a more than 20 cent move during the past month, it just makes sense to take some money off the table. WE TOOK PROFITS AND EXITED ALL LONG POSITIONS INTO LAST NIGHT'S SURGE. We will look to reinstate long positions into decent weakness in the coming weeks...or maybe even days.

 With whatever recommendations I make, I am in the markets to make big hits, not because I’m a grand slam dreamer, but simply because that is the nature of how commodity prices move.

 And I might be dead wrong, which can mean losing what you invest,

But I have to say...

I don't think it gets any bigger than SHORT CATTLE HERE

It is not uncommon for commodity tops to form in two stages…The first, with everybody roaring bullish, is just an “out of nowhere” straight down sort of collapse away from record highs, that totally surprises producers and pretty much puts them in “hang on and hope” mode…and definitely puts some of their formerly bullish attitude into question…However, what then often follows is a grinding recovery back up to somewhere under the previous highs, which you’d better believe, puts them ALL back in a “I knew it was gonna come back” totally bullish mode (they didn’t, I assure you, when it was on its lows)…AND THEN THE REAL FAILURE BEGINS…THE ONE THAT STARTS DOWN, CRASHES STEADILY AND SOMEWHAT HARD…AND DOES NOT COME BACK UP AGAIN.

And that IS where I think we are in the Cattle Complex…We’ve had the initial failure, and then the rally, and the bullish story, summed up as, “Cattle numbers are at 73 year lows. Cattle prices are going to be GOOD for the next couple of years,” is once again being touted non stop by ag analysts and cattlement everywhere…And I THEREFORE CONTINUE TO REGARD THE CATTLE COMPLEX AS HEADING TOWARDS A MASSIVE FAILURE AND RECOMMEND SHORTING BOTH FEEDER CATTLE AND LIVE CATTLE.

 The long term charts present an astounding perspective as to how high these markets really are...

HOW THE TOP WORKED BACK IN 2014-15 WITH THE SPECIFIC FUTURES CONTRACTS

Here are options I like right here, right now…today…as I firmly believe today’s 400 point downswing (a massive surprise to analysts) easily could be the beginning of a “doesn’t look back” decline…And DO NOTE HOW SIMILAR THE CHART ACTION IS COMPARED TO THE 2014-15 TOP. While it definitely does not mean it will go down, I do remind you that this sort of formation is NOT uncommon when commodity tops are being made.

 DON’T SKIP THIS PARAGRAPH…

With everybody CRAZY BULLISH last fall, the whole cattle world was buying Feeders AT ANY COST from September thru November...to be fattened out and sold as Live Cattle this spring, with those “herds” of buyers thinking there was easy money to be made in doing so. However, ALL of those animals will be coming to market at more or less the same time during the coming months, which could/should be devastating to prices…and with it, the idea of a “beef shortage” will get blown out the window…

AND....

IT IS HIGHLY IMPORTANT TO KNOW THAT WHEN STEERS ARE SLAUGHTER-WEIGHT READY, YOU CANNOT STORE THEM AWAY IF YOU DON'T LIKE THE PRICE…WHEN THEY ARE READY TO GO, CATTLEMEN DO HAVE TO SELL…AT WHATEVER THE PRICE MAY BE…WHICH IS WHY I  SAY THAT THERE IS NOTHING MORE BRUTAL IN FUTURES THAN THE LAST PART OF A CATTLE BEAR MARKET…AS, AND I MEAN THIS, EVERYBODY HAS NO CHOICE BUT TO DUMP THEM…ALL AT THE SAME TIME…ON THE MARKET...AND PRICE "COLLAPSE" DOES NOT EVEN BEGIN TO DESCRIBE WHAT CAN HAPPEN.

 And if you want to know what I mean? Take a closer look again at when the lows were made in that October, 2015 Live Cattle contract shown above...WHERE IT DROPPED OVER 20 CENTS IN 12 TRADING DAYS…and for exactly the reasons I outlined above. Like I said, Cattle are as nasty as it gets at the end of a bear move.

Here are a few other option possibilities...

Because I think this avalanche of Cattle is actually going to start hitting the market during the next 30-45 days, I think that both of these shorter term April options offer tremendous leverage…and recommend using them as an “add on” to core positions in the May and June contracts shown above.

This Live Cattle option looks so cheap as to almost make me a little wary...but its low price could be an indication of how bullish everybody still is...which I LIKE.

We’re hitting on lots of good stuff here…If you’re not on, this trade would be a great place to start…I mean really…Take a good look at those 50 year cash charts and tell me the Cattle Complex is not a high probability short.

GET ON BOARD WITH ME!

Call me if you want to know more…

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Feeder Cattle, Live Cattle