July 3, 2024

Short Cattle!

The commodity markets are perpetually going up big…and down big…And at their tops, they are just as perpetually accompanied by fairly unanimous “bullish” fundamentals, sentiment, logic, etc.…and exactly the opposite of all that when having reached their bottoms.  

AND, as I have forever stated, AT A TOP, MARKETS NEVER, EVER, GIVE YOU SOME CLEAR AND EASY SIGNAL THAT “THE BULL MARKET HAS ENDED AND THAT THE INITIAL, ALMOST INEVITABLE, BIG, FAST DECLINE HAS BEGUN, STARTING RIGHT NOW.” NEVER!...And this is coming from a guy who is no genius, but not stupid either, and has more experience at doing this than probably 98% of the entire financial markets population…No matter what the market may be, it’s always the same. They ALWAYS start down when NOBODY is expecting it…on NO big news event whatsoever.

So what I’m saying is, when you think you’re at a top, if you want to go looking around for opinion that offers you confidence in going short, you’re NOT going to find it

My Roaring Bearish Opinion continues to be that all of the above applies to the Cattle Complex right now…

Before getting to Cattle specifically, take a look at the following 12 markets as very recent 2024 examples of why I use the term “inevitable big, fast declines,” and please DO KNOW THAT NONE OF THESE COLLAPSES WERE PREDICTED, AT ALL, BY THE ANALYTIC AND MEDIA MASSES. NONE OF THEM. Virtually everything you would have read, about each and every one of these markets, before they got rocked, was nothing but BULLISH. Period.

 Remember all the headlines

About Chocolate prices?

When you get down to it, those markets pretty much cover the entire commodity board…and all 12 of these declines, averaging 25%, have occurred since January of this year…with one major exception…The Cattle Complex. And yeah, there were differing circumstances in each of these markets, but they all had purportedly “bullish fundamentals” at each of those peaks, but then got clobbered…AND, you’d better believe that as they began falling, their declines were generally portrayed by analysts and talking heads as, “pullbacks,” that is, “buying opportunities,” when they definitely were NOT.

 And the Cattle Market? Which has yet to crack? But WILL!!!

THE big statistic that everybody in Cattle industry cites is that the herd here in the USA is the smallest it’s been since 1961…and, hey, that sounds pretty frigging bullish doesn’t it? But, aside from the fact that I can give you innumerable market tops that had the same sort of “Holy cow! stats,” and then totally crashed, to me, this “bullishly low” number only explains why prices have rallied, and has NOTHING to do with what comes next…I mean, for 50 years, as I have documented in previous newsletters, CATTLE HAVE ROUTINELY UNDERGONE ON AVERAGE 20% DECLINES FROM EACH AND EVERY ONE OF THEIR BULL MARKET HIGHS…ALL of which, I promise you, were accompanied by some “undeniably bullish” story or statistics. So I think it’s a classic major mistake to now think that today’s Cattle market is any different today than it has been in the past…And I KNOW that it’s not inherently different than all of the other commodity markets…or that it’s somehow immune to the same big percentage selloffs, in ALL of them, that have been taking place for the past half century…I don’t care HOW bullish the numbers supposedly are…THEY ABSOLUTELY REPRESENT THE PAST…AND CATTLE ARE, IN MY OPINION, A MAJOR, MAJOR SHORT OPPORTUNITY.

I continue to see ALL of the action in both Feeder Cattle and Live Cattle since last fall as nothing more than a 9 month sideways consolidation, representing a massive MAJOR top in prices…that will imminently be followed by downside moves that will make the past year’s 20-30 cent ranges look tiny in comparison…

It’s not a question of IF, just WHEN…and to me, it easily looks like it is about to roll over and crash…RIGHT NOW…wherein ANY down day is the move getting started…Again, with NO big newsflash to suggest it’s happening. That’s the way futures markets work really…where big things happen when nobody is expecting it.

Here’s the big picture…

And my current recommendations…

 In FEEDERS…I like this…

Or this…

And in the Live Cattle…

To put it mildly, I see this trade as having every bit of the profit potential I have outlined here…Obviously, if I am wrong, you could lose every dollar you put on the table…but I honestly don’t think it ever gets any bigger than this…After all, it isn’t every day that you get the opportunity to short a market at never-before-seen prices.

I definitely recommend buying “units” consisting of 1 put in each of the two markets…

I THINK THIS COULD BE REALLY BIG.

Contact me if you have an interest…

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