“Shootin’ The Bull”
End of Day Market Recap
by Christopher Swift
9/28/2023
Live Cattle:
Two days of perceived heavy human selling was interrupted today by lack of human presence and a large one by the computers. Humans can't act, or react at the speed of the computer generated trade. Neither can a broker call enough clients to move in the speed of trade, or can the broker/analyst make a big enough impact on enough people to actually trade and move in the speed prices do. So, I think today's rally is as simple as producers hedged inventory the past two days, rested on the third, and allowed computers to push prices back to more attractive selling levels. Whether exact or not, that's what appears to have transpired. I used this rally to continue to recommend owning at the money options when hedging cattle on feed. One, you will need every penny if the market moves higher, and second, may have an opportunity to sell lower strike puts to reduce the premium paid for the initial put option. Recent price action in outside markets suggests the Fed's agenda to reduce inflation is being realized. The increased rate of interest will entice more investment capital from risk and placed on deposit for a guaranteed return. As well, indebt governments and businesses will have to either pay down debt, increase prices, or decrease profit margin.
Feeder Cattle:
No place for the meek in this market. Hyper volatility is upon us as humans are believed speaking volumes through heavy selling and a mass exodus of open interest, also humans. Today's higher trade is believed merely the short that wanted out and simply had to fight the computers pulling offers at every level. Right or wrong, this is my belief. Today's rally offered some reprieve from the past two days selling. I recommend you use this in obtaining the derivatives needed to help manage the potential for adverse price fluctuation. I am under the impression that upon a potential government shut down, LRP subsidized insurance policies won't be available. I recommend you consider this were the cattle feeder to have a change of heart over the weekend and not believe feeders are worth current price.
Corn:
Corn was firm again today. Purveyors are prompted to watch their corn $4.90 call, $4.40 put fence as December is at $4.89. I do not recommend doing anything yet as this is a hedge with ample time for corn to still trade lower. December of '24 corn has begun to trade higher, and out side of its sideways range. I find that interesting. Beans were soft and wheat was as well. Wheat has resumed its down trend and beans are believed meandering until more harvest data can help decipher this years yields.
Energy:
Energy is believed to have reversed today. Crude oil made a new high in this rally and has formed a 5 wave pattern. Neither the gasoline or diesel fuel made a new high and it is believed that both of these may have already topped and Wednesday and today's higher price action corrections of their initial move lower. I sent out a report this morning telling of the billions of dollars the Russians and Saudi's have captured from their manipulation of lower outputs. As the current administration has responded in no way at all, it suggests they are fine with this, as nothing saps dollars from consumers pockets faster than gasoline. Confronted recently on relying more on commodity comments than political, I will state that I do not like the political arena, believe that most within are self-fulfilling indulgences, with little to no commonsense. However, what politicians do, and how they act, impact markets movements, and to ignore or disregard, due to personal beliefs of politics', it is a necessary evil to have to follow them and at least have an idea as to the agenda's they are attempting to promote.
Bonds:
Bonds continue to plummet. They should as those who bought them are being raked over the coals and then pushed back in for further roasting. The Fed is keeping their promise to route entrenched inflation for which their misrepresentation of transitory inflation allowed the time for it to become entrenched. Equities are in a down trend and bonds continue to form the major wave 5 low. Businesses are turning backwards and from first hand information today, the trucking/freight industry is slowing down. Oh, and why shouldn't it be? The lack of consequences for theft is closing stores, malls, and retail outlets at an alarming rate. So, there won't be any more goods trucked to the 9 Target stores closing, or to the hundreds of other business shutting their doors due to no theft deterrent. Or, even worse, their own company supporting the theft by doing nothing, while endangering their own employees. This seems a little backwards to me. Support those that are stealing from me, and jeopardize the safety of the ones I'm employing. I may have to ask Opie to see what Johnny Paul Jason has to say about this.
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On the date of publication, Chris Swift did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.