From the Desk of Ian Culley @IanCulley
Aside from gold’s new all-time highs, commodities look rough.
Natty gas is falling below two bucks. Copper is retesting four. And corn is rolling to its lowest level since 2020.
But of all the vulnerable commodities contracts, only one area stands out as a viable short: cattle.
Feeder cattle futures closed below 250 this afternoon, triggering a sell signal:
Notice the 14-day RSI led price by registering a new multi-month low ahead of today’s breakdown. The waning momentum speaks to weakening demand and the possibility of a swift move lower.
As highlighted in June, our downside targets are now 234 and 175.
Live cattle futures also represent a short opportunity.
While it has yet to complete a potential diamond top formation, it fell almost one percent today following a failed breakout:
I like shorting live cattle below 177, targeting 163 and 130.
But I might start nibbling on a short position if the 14-day RSI posts a fresh low.
That's it for today.
Sellers are giving risk assets a proper thrashing.
Don't let the downside action deter you from following your trading plan.
Instead, buy pockets of strength (precious metals, bonds, Japanese yen), sell weakness against well-defined levels (cattle futures), and clamp down on risk.
COT Heatmap Highlights
- Commercials hold their smallest net-short position for RBOB gasoline in three years.
- Commercial's net-long exposure to cotton futures pulls within 6,000 contracts of a historical record.
- Commercial hedgers hit another record-long position for the Canadian dollar.
Click here to download the All Star Charts COT Heatmap.
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