June 22, 2021
Cattle Beginning to LIFT OFF…
Going Relatively Straight Up I think…
Nothing about charts is absolute but I maintain that they ultimately represent the best picture of what a market is “trying to do,” regardless of what all the talking heads are chattering about (generally in complete unison). As I have stated forever, if everybody is talking about it…if all the genius experts can “explain” what is happening, or are unanimously regurgitating the latest headlines, or are all, like sheep, citing unquestionably “bullish” (or bearish) statistics…then ALL of it has probably already been accounted for in the current market price, and has NOTHING to do with where a market goes next…EXCEPTING the fact that when you do reach the point where ALL of the rhetoric is one way, it eventually does result in a situation where “everybody who could buy (or sell)…has bought (or sold),” which generally means that market is now set to move dramatically in the opposite direction…And I firmly believe this is now the case in Corn and Soybeans…The whole commodity world is on the bull side…and I think both markets have definitely topped and are going sharply and decidedly lower.
And although the top in Corn and Soybeans is not the primary subject here, having them go down would/should have a direct impact on the market that I think has been building, and building,…and building towards a truly massive, and explosive, bull move…that being, Feeder Cattle.
Going back to my opening statement regarding charts, after 41 years of using them as my primary tool, I will offer that there are a few formations that do have a substantially high probability of predicting what will happen next in a market, and while this certainly does NOT mean what they are signaling will happen, for me, they do present what really is the best set up I know of in this business of trying to score BIG when you are right about a trade. And I mean that…The BEST, highest percentage, set up I know of…which, one more time, does not mean I will be right…is what I’m showing you on the chart below…and, given this chart pattern/formation, together with a confirming “read” (generally contrary) of what all the “experts, analysts and strategists” are saying? I WILL TAKE THAT TRADE EVERY TIME I SEE IT.
And that is what we now have in the Cattle markets…IT DOES NOT MEAN I WILL BE SUCCESSFUL BUT THIS TRADE, AND I AM SPEAKING AS OBJECTIVELY AS IS HUMANLY POSSIBLE, IS AS GOOD AS IT GETS.
BUY THE CATTLE MARKET…Right here…Right now.
Here’s the 10 year look…
And here’s how Corn HAS been holding Feeders back…as the economy opens up and the demand for Beef takes off…But I strongly believe Corn has topped.
This is one option I like here…But anticipating a LARGE move, I am also going further out-of-the-money as well…Also to note that with the volatility we’re seeing, this option could be priced quite differently by tomorrow…
As I have been saying, I think the Cattle Complex IS going to absolutely explode on the upside…and that Cattle will become the NEXT big bullish commodity market headline…Like Lumber, like Copper, like Corn and Soybeans, like Hogs, Housing, etc. that you’ve seen lately become big media stories, 2-3 months from now I expect you’ll be hearing about Cattle.
And with Feeders up about 10 cents since early last week, it sure as hell looks like it is beginning to happen…like I said, right here and right now.
For those of you who are already on all this with me, I absolutely believe it’s time to add…For those of you who are just watching all this happen (the crash in Corn, Soybeans, and Hogs, as well as the Cattle vs Hog Spread) I urge you to contact me and get on SOMETHING.
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: Cattle, Hogs, Corn, Soybeans