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LE1! trade ideas

Live Cattle Futures ( LE1! ), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 147.900 Pivot: 144.275 Support : 141.100 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.275 to the 1st resistance at 147.900 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.100 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
What would you have on a date night? Chicken or steak? We’re going to go out on a limb here and say your date night budgets and recessionary risk are likely inversely correlated! As recessionary risk starts to weigh on investors’ minds, purse strings for date nights are likely to be tightened, which spells trouble for the date night classic, wine & steak pair. Cattle Futures have joined the broad market selloff over the past few days as investors remain on edge. This recent move lower has confirmed a break below the neckline support for a double top pattern observed on a shorter timeframe, which is noted as a bearish reversal pattern. On a longer timeframe, the decline has also broken the 4-month long uptrend for Live Cattle. With not much in the way of support, it’s quite possible to see another leg lower, similar to the pattern we observed in May 2022 where prices corrected around 4.5% once the uptrend was broken. Using this as a reference, the 143 range marks the next potential stop for live cattle prices if we were to extrapolate a 4.5% decline from the breakout point. The broken uptrend followed by the confirmation of the double top pattern spells trouble for live cattle prices. As such, we lean bearish on live cattle futures and will likely swap the date night steak for perhaps chicken… Entry at 148.550, stop at 150.325. Target at 144.850 and 143.075. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
Editors' picks
CME:LEZ2022Short
by inspirante
10
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 147.900 Pivot: 144.275 Support : 141.100 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.275 to the 1st resistance at 147.900 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.100 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 147.900 Pivot: 144.275 Support : 141.100 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.275 to the 1st resistance at 147.900 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.100 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 147.900 Pivot: 144.275 Support : 141.100 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.275 to the 1st resistance at 147.900 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.100 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 147.900 Pivot: 144.275 Support : 141.100 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.275 to the 1st resistance at 147.900 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.100 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures ( LE1! ), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!
by Tickmill
Live Cattle Futures (LE1!), H4 Potential for Bullish RiseTitle: Live Cattle Futures (LE1!), H4 Potential for Bullish Rise Type : Bullish rise Resistance : 148.125 Pivot: 144.475 Support : 141.150 Preferred Case: On the H4, with price moving along the ascending trendline and above the ichimoku indicator, we have a bullish bias that price will rise from the pivot at 144.475 to the 1st resistance at 148.125 where the 127.2% fibonacci extension is. Alternative scenario: Alternatively, price could break pivot structure and drop to the 1st support at 141.150 where the overlap support is. Fundamentals: No Major News
CME:LE1!Long
by Genesiv
Where are commodities heading to? Beyond 2022Where are the meat or commodity prices heading? Meat prices have been rising at a rate of about 3% per annual over the last 40 years. Meat is what I classified as an edible commodity, so is corn, wheat and rice. And as these commodities start picking up in prices, they are the one that will give the central banks a huge headache and to consider to hike its interest rates than the other commodities in the CPI basket. Why is this so? In short, people can still live with some inconvenience without cars or petrol, but not without food. Therefore, there is an urgency for the policy makers to first take care of the basic needs of the people. Content: . Long-term direction of Live Cattle . Trading ideas . Investing ideas Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. A little hack here to project the coming CPI data and also to know how aggressive the Fed will be with interest rate hike - you may consider to track the development of these edible commodity prices, if it is still trending up, we should be expecting a higher CPI and interest rates. Example on Live Cattle Futures: 0.025cts = US$10 0.10cts = US$40 145.00 = 1450 x US$40 = US$58,000 From 144 to 145 = US$400
Editors' picks
CME:LE1!
by konhow
10
Live Cattle are on the MOOOOVEWatch us on RFD-TV, today at 9:45 AM CT! Cattle Summary Daily Cutout Values Choice: 257.26, Down .75 from the previous day. Select: 234.73, Down 1.31 from the previous day. Choice/Select Spread: 22.53 5 Area Average Cattle Price Live Steer: 142.17 Live Heifer: 141.54 Dressed Steer: 226.63 Dressed Heifer: 227.19 Daily Slaughter Estimated at 127,000. 4,000 more than last week and 7,000 more than the same week last year. Feeder Cattle Index 9/08/2022: 181.24 9/072022: 180.31 Technical Snapshot Live Cattle October live cattle futures staged an impressive rally on Friday, trading back near the top end of the August range. Resistance remains intact, we see that as 145.975-146.25. A breakout and close above this pocket could spur another leg higher, with the next and last meaningful resistance pocket coming in from 147.35-147.50. This pocket represents the contract highs from April. We remain skeptical of a bigger directional move, but it appears outside markets are taking on the " risk-on" attitude which could be supportive to cattle. Resistance: 145.975-146.25***, 147.35-147.50** Pivot: 143.25-143.775 Support: 141.75-142.10****, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine
Live Cattle Drift LowerCattle Summary Daily Cutout Values Choice: 258.34, Down 1.45 from the previous day. Select: 237.74, Down 1.94 from the previous day. Choice/Select Spread: 20.60 5 Area Average Cattle Price Live Steer: 144.85 Live Heifer:145.00 Dressed Steer: 229.85 Dressed Heifer: 229.80 Daily Slaughter Estimated at 125,000 head, 1,000 more than last week and 6,000more than the same week last year. Feeder Cattle Index 8/30/2022: 183.04 8/29/2022: 183.00 Technical Snapshot Live Cattle October live cattle broke lower yesterday, taking out the previous day's low, making its way closer to the cluster of major moving averages, which we've listed as near-term downside target for some time now. If the market is unable to defend this support pocket, it's possible that we see the selling accelerate. We are keeping a very close eye on outside markets as they remain volatile and seemingly uneasy. Resistance: 145.10-145.975***, 147.35-147.50** Pivot: 143.25-143.775 Support: 141.75-142.10****, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine
Live Cattle Shrug Off Outside Market WeaknessCattle Summary Daily Cutout Values Choice: 259.79, Down 3.25 from the previous day. Select: 239.68, Down 3.07 from the previous day. Choice/Select Spread: 20.11 5 Area Average Cattle Price Live Steer: 144.00 Live Heifer: N/A Dressed Steer: N/A Dressed Heifer: N/A Daily Slaughter Estimated at 126,000. Unchanged from last week and 6,000 more than the same week last year. Feeder Cattle Index 8/29/2022: 183.00 8/26/2022: 183.16 Technical Snapshot Live Cattle October live cattle futures were able to break the 4-day streak of lower prices, on a day when the outside markets saw meaningful pressure. If you're bullish the market, this is your silver lining. The market finished the session right near the upper end of our pivot pocket, 143.25-143.775. If the Bulls can keep yesterday's momentum alive, perhaps we see a retest of 145.10-145.975. We are in the camp that the cash market may stall out, which could limit the upside. We are monitoring outside markets and commodities as a whole, if they continue to trend lower, it will be an uphill climb for live cattle. We are still in the camp that the three major moving averages could be tested in the near term. Resistance: 145.10-145.975***, 147.35-147.50** Pivot: 143.25-143.775 Support: 141.75-142.10****, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine
Cattle Futures Finished Lower Yesterday. More of the Same TodayCattle Summary Daily Cutout Values Choice: 264.46, Up 1.09 from the previous day. Select: 239.72, Up .13 from the previous day. Choice/Select Spread: 24.74 5 Area Average Cattle Price Live Steer: 144.39 Live Heifer: 143.70 Dressed Steer: 229.93 Dressed Heifer: 229.86 Daily Slaughter Estimated at 124,000. 5,000 more than last week and 6,000 more than the same week last year. Feeder Cattle Index 8/12/2022: 179.04 8/11/2022: 178.28 Technical Snapshot Live Cattle October live cattle held well early in the session but gave up ground as the day continued. The Pullback brought prices back into our pivot pocket from 142.75-143.75. In yesterday’s report we noted that “The Bulls have the technical advantage until we see a breakdown back below this pocket.”. A failure to defend this level in today’s session could lead to a retest of trendline support and three major moving averages. All of these indicators come in from 141.35-141.90. With so many indicators converging in one pocket, we are labeling this as a MUST HOLD level. Resistance: 145.10-145.975****, 147.35-147.50** Pivot: 142.75-143.75 Support: 141.35-141.90****, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine
Cash Cattle Firms. Is There More Upside Left? Daily Cutout Values Choice: 263.37, UP .27 from the previous day. Select: 239.59 Up 2.13 from the previous day. Choice/Select Spread: 23.78 5 Area Average Cattle Price Live Steer: 144.3 Live Heifer: 143.69 Dressed Steer: 229.95 Dressed Heifer: 229.88 Daily Slaughter Estimated at 118,000. 3,000 more than last week and 2,000 more than the same week last year. Feeder Cattle Index 8/11/2022: 178.28 8/10/2022: 178.06 Commitments of Traders Update Live Cattle Friday’s Commitments of Traders report showed that Managed Money were net buyers of 11,067 futures/options contracts through August 9th. This expands their net long position to 49,072 contracts. Feeder Cattle Friday’s Commitments of Traders report showed that Managed Money were net buyers of 668 futures/options contracts through August 9th. This puts them net long 479 contracts. Technical Snapshot Live Cattle October live cattle gave back some ground on Friday, but all in all it was a constructive week with the market posting higher lows and higher highs. The market managed to work itself back into the gap from April 25th but was unable to fill that gap completely. The topside of the gap comes in at 145.975. Outside markets are under pressure this morning on the back of bearish news from China. This may put a headwind in prices to start the new week of trade. Previous resistance will act as our pivot pocket that comes in from 142.75-143.75. The Bulls have the technical advantage until we see a breakdown back below this pocket. Resistance: 145.10-145.975****, 147.35-147.50** Pivot: 142.75-143.75 Support: 141.425-141.90***, 138.025-138.35****
CME:LE1!
by OliverSloup_BlueLine
Cattle Futures are on the MOOOveCattle Daily Cutout Values Choice: 263.23, Down 1.50 from the previous day. Select: 237.08 Down .62 from the previous day. Choice/Select Spread: 26.15 5 Area Average Cattle Price Live Steer: 146.00 Live Heifer: 139.15 Dressed Steer: 231.87 Dressed Heifer: N/A Daily Slaughter is estimated at 126,000. 2,000 more than last week and 8,000 more than the same week last year. Weekly Export Sales Beef: Net sales of 14,600 MT for 2022 were up 22 percent from the previous week, but down 17 percent from the prior 4-week average. Technical Snapshot Live Cattle October live cattle recovered all of the losses from the previous session and then some, achieving their highest daily close since the month of May. If the Bulls are able to defend support and mark higher lows, then the April gap is still in-play, 145.10-145.975. Resistance: 145.10-145.975****, 147.35-147.50** Pivot: 142.75-143.75 Support: 141.425-141.90***, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine
A Tale of Two Americas CME:LE1! The U.S. Bureau of Labor Statistics (BLS) released July non-farm payrolls on August 5th and July Consumer Price Index (CPI) on August 10th. Both reports beat market expectations. About 528,000 new jobs were created in July, well above June level. Annualized Inflation was lowered to 8.5% from the record 9.1% in June. While strong jobs data and taming inflation show the resilience of US economy, worrying signs are emerging. There are strikingly different faces of America: 1) People with jobs and those without; 2) Financially sound public companies and struggling small businesses; 3) Commodity prices that are under control, and those still flying high. July Non-farm Payrolls According to the Census Bureau, US population was 332 million in January 2022. Civilian Labor Force data reported by the BLS was 164 million in July, 49% of total population. It appears that the non-farm report shows us only half of the country. America: People with Jobs Total number of non-farm employees was 158 million in July. Of the half-million new jobs created, Leisure & Hospitality contributed to 96,000 (18%), while retail, wholesale, transportation, and warehousing together accounted for 42,000 (8%). Service-sector jobs tend to be low-pay, part-time and/or without benefits. Health care and Government created 70,000 (13%) and 57,000 (11%) new jobs, respectively. Since 2020, the Federal government has spent trillions to fight the pandemic and rescue the economy. These jobs were funded by budget, not by growing demand of a free market. Although American consumers continue to support the economy, low-income earners are struggling with rising costs of housing, food, transportation, and household necessity. America: People without Jobs Officially, the U.S. had 5.7 million unemployed persons in July. It is very misleading. According to the July report, “The number of persons not in the labor force who currently want a job was 5.9 million in July. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.” If we take both into consideration, the total number of unemployed people would be 11.6 million, with real unemployment rate at 6.8%. Additionally, more than half of the population is not included in the labor force, who count children, housewives, retirees, military members, adult students, and US citizens living abroad among them. People without jobs still have living expenses. They may be supported by working family members, government programs, or charities. They are the most vulnerable when the economy turns south. Retirees with fixed income are also being hit hard. With rising price, they sometimes must make the hard choice between food, medicine, and filling up the gas tank. Now, let’s turn our focus to American businesses. American Business: Public Companies From the pandemic triggered selloff in March 2020, the S&P 500 rebounded and doubled its value to 4800 last December. In 2022, the index was down 24% in the first six months. It has since recovered half the losses, down just 11% year-to-date as of August 10th. Based on data compiled by Liberated Stock Trader, these 500 publicly traded companies employed 28 million people worldwide. Walmart (WMT) is the biggest employer with a 2.3 million workforce. Amazon (AMZN) came in 2nd, with 1.3 million employees. On average, S&P component companies have 56,000 employees. With the ability to produce and distribute their products around the world, Big Businesses could withstand the impact of higher cost or adverse policy better than most companies. According to WSJ data, as of August 5th, the trailing 12-month Price/Earnings Ratio (P/E) is 22.6 for S&P 500. Forward P/E is 18.2. Market expects S&P component companies to have lower earnings, but the impact of pending recession is not very significant. American Business: Private Companies Let’s start off by saying that I do not have comprehensive research on private businesses. Since most readers could only invest in the secondary market, we could use the Small-Cap Russell 2000 index as a proxy to mainstream American businesses. Russell has a YTD return of -12%, about 1% below the S&P. In the past five years, Russell underperformed S&P by 28%. Small-Cap stock performance is especially weak at time of market turmoil. A big difference is in the P/E ratio. Russell has a trailing P/E of 68.9, but the forward P/E sharply drops to 22.6. In good times, Small-Cap stock price have been inflated a lot more than the Blue-Chip. I expect their price to deflate faster in the pending recession. July CPI Data July CPI is unchanged from June month over month (M/M), and up 8.5% year over year (Y/Y). Core CPI, which excludes food and energy, is up 0.3% M/M and +5.9% Y/Y. Diving in the data by commodity category shows a different picture. Food: Up 1.1% M/M in July from 1.0% in June. Annualized food inflation is now 10.9%. Energy: Down 4.6% M/M, of which, gasoline, -4.6%; diesel, -4.7%; natural gas, -3.6%. Annualized energy inflation remains uncomfortably high at +33%. Gasoline price is 45% higher Y/Y after 50 days of consecutive price cuts. Commodities (excluding food and energy): Up 0.2% M/M and 7.0% Y/Y. CPI data M/M and Y/Y for selected products is: New cars, +0.6% and +10.4%; Used cars, -0.4% and +6.6%; Clothing, -0.1% and 5.1%; Pharmaceuticals, +0.6% and +3.7%. Services (excluding energy): Up 0.4% M/M and 5.5% Y/Y. CPI data M/M and Y/Y for selected service categories is: Housing, +0.5% and +5.7%; Transportation, -0.5% and +9.2%; Medical, +0.4% and +5.1%. Overall, inflation is lower in July only because the sharp decline in energy prices offset the price gains in food, housing, new cars and medicine . Investors' thrill in the stock market may be gone when they go the supermarkets after work. There are signs that consumers are downgrading their food purchases in the face of runaway inflation. Firstly, people tend to give up dining out in favor of cooking at home to save money. In July, food at home inflation was +1.3% M/M and +13% Y/Y. Price inflation for food consumed away from home increased at a slower pace, up 0.7% M/M and 7.6% Y/Y. There is a 5.5% spread, which impacts food spending at these two segments. Secondly, meat purchases show an apparent shift toward less expensive options. In July, beef price inflated 3.4% Y/Y, while pork was up 7.6% and chicken up 17.6%. Within each meat category, lower cost products also show higher inflation, indicating more demand. For example, ground beef was up 9.7% Y/Y, while steak price was down 1.5%! Bearish Trade Ideas With the headwind facing American economy, I think that a recession is inevitable. Based on the above analysis, I recommend shorting the Russell 2000. A 60+ P/E is too rich a valuation. The index could crash harder than S&P during an economic downturn. We could consider shorting the CME Micro E-Mini Russell 2000 December contract (M2KZ2) . Each contract is $5 x Index. At current quote of 1,974, each contract has a notional value of $9,870. CME requires initial margin of $550. Another idea is on beef prices. American consumer generally eats more beef while dining out. With the shift to cooking at home and buying cheaper meat, I expect beef prices to fall faster than pork price during a recession. We could short the CME Live Cattle December contract (LEZ2) . Each contract is 40,000 pounds of cattle. At current quote of 150.575, each contract has a notional value of $60,230. CME requires initial margin of $1,600. The futures market is extremely volatile this year. Getting an information edge increases your odd of success. I suggest my readers to subscribe to CME market data. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME:LE1!Short
by JimHuangChicago
5
Consolidating Cattle Tuesday's Slaughter is estimated at 124,000. 1,000 less than last week, but 1,000 more than the same week last year. Tuesday's Cutout Values Choice: 268.46, Down 2.14 from the previous day. Select: 241.55, Down 1.35 from the previous day. Choice/Select Spread: 26.91 5 Area Average Cattle Price Live Steer: N/A Live Heifer: N/A Dressed Steer: N/A Dressed Heifer: N/A Live Cattle Technicals (October): Consolidation is the name of the game for live cattle, as futures continue to tread on/near the 100-day moving average, 141.85. A break and close below this pocket could take us down to a 140.40-140.975. This pocket represents the 50 and 200 day-moving average, along with trendline support from the May 31st lows (all of which are climbing higher each day. As mentioned in previous reports and interviews, we would look at this as a potential buying opportunity for clients who want to be long. Resistance: 145.10-145.975****, 147.35-147.50** Pivot: 141.85 Support: 140.40-140.975***, 138.025-138.35**** Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CME:LE1!
by OliverSloup_BlueLine