Cattle Bronking To New High

• May 21, 2001
• Marc Dupee

August feeder cattle

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Notice that feeders’ action three days ago is telling. The gap-up action and
finish on its high is one of the strongest things that a market can do. The
action was reflected by leaving a tail, where the contract started on its high,
tested lower, than rallied to finish on the high. The following day’s lap-up
opening and today’s gap-up opening to its highest level of the year is very
bullish as well. Today, feeders are making good on an Off The Blocks
entry out of its
New 10-Day Highs indication. 

June live cattle
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lives
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In the metals, June gold
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to a new multi-month high. The contract has traded straight back down to fill
the morning gap and the contract is finding some support at the 283 gap. An
inflation theme, doubled lease rates (the cost of borrowing gold), and a higher
number of longs from the latest Commitment of Traders Report are all factors.
Gold producers have also been rallying.

Although gold has gotten all of the attention in recent days, copper
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powered off contract lows on rising volume. The Fed cut interest rates to their
lowest level in seven years last week. Cooper prices are highly correlated with
interest rates, because its demand is in large measure determined by industrial
and construction spending. Today is the fourth straight up day and the metal has
gapped or lapped in each of those days. This represents unusual strength off the
low. Copper is pulling back from a 20-day (Turtle Soup) and two-month
high. 

Also in the meats,
June lean hogs’
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May) indicates short-term strength and suggests a test of the April 25 unfilled
gap. A test of that area in the 71.000 area would complete the right shoulder of
a head and shoulders top pattern. 

The bottom has fallen out of the bushel in wheat as good
planting conditions enhance the chance of another large crop. At the 264 level, July wheat
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is Turtle Souping and holding at its contract low.