On 10/13 the “Power of the Pattern” was reflecting a bearish pattern looked to be forming in Cattle futures in the chart below (see post here)
Why would Cattle be important to your 401k or long stock positions? Look at the second chart below how Cattle futures impacted 401k and long positions in 2008!
CLICK ON CHART TO ENLARGE
The chart below is an overlay of the 500 index, Cattle and Corn prices in 2006-2010. In 2008, Cattle and Corn moved higher for a while even though the 500 index was creating a series of lower highs. Once Cattle and Corn broke support the 500 index started falling like a rock!
CLICK ON CHART TO ENLARGE
Turning the page forward, Corn has broken support and has declined over 20% of late.
At (2) above Cattle Futures are attempting to break support of the flag/pennant pattern. Great Escape 1 started picking up downside speed when Corn and Cattle broke down. Watch these Ag products to see if Great Escape GE2 could be about to pick up momentum!
Aaron…
Dshort came up with the “Kimble Cattle Indicator” He is so great and has such a special sense of humor! My point to the Cattle indicator, the great escape was taking place and investors were finally forced to sell winnners in 2008, which back then was Cattle.
Turn the page forward, what is the best performing commodity at this time? I belive cattle is the winner. So now if you see the winners (Cattle/Gold) start being taken out to the shed and shot, it would suggest that some major selling behind the scenes is taking place!
Chris
Hi Chris,
Live Cattle Futures closed today at 118.30 (-1.2%). The descent off the trend line above could be very steep as you have already noted. As far as a “mental stop”, what level do you feel is a point of no return?
Do you feel that the current trendline could be tested as resistance if price drops?
Could you also let me know if $DJALC and/or COW attempt to track future or current prices?
Thanks,
Aaron
cjk… Brown Cow?
COW ETF is looking a little RED over the past 6 weeks!
C
How now brown cow? Is this chart BGH free?
Matt… A breakdown of the Shanghai for sure would be a very poor sign for global markets
Especially since the majority of key markets are up against resistance!
Chris
Chris… IMHO a break of a line by a few percent (2-4%) is needed before a breakout/breakdown takes place. Ideal, it does it on a weekly close. The pattern was bearish in Cattle in October and so far some weakness continues.
What does a cow know about the stock market….From a portfolio allocation standpoint, “Mooooooove some of your risk assets to cash on a Cattle price breakdown!” 😉
Chris
I assume that you would also seek shelter if Shanghai dropped much from here?
thanks,
matt
What does a cow know about the stock market? :)))
Apparently more than most think. What level would you say “constitutes” a breakdown?