The Sauce is Coming Off

Good morning! It's Tuesday, June 30.

The last time we talked about feeder cattle, we said they were getting "spicy." If you go back and watch that video, prices were trading around the 365 area, and we were targeting a move into the 370–374 range.

Now, the story has changed.

The momentum is starting to fade. August feeder cattle are struggling near the 375–376 level after reaching a high around 377.30 last week. Since then, the market has pulled back sharply.

In our newsletter at Heartland Investor, we've been watching what appears to be a head-and-shoulders pattern developing on the continuation chart. It's a little difficult to show clearly on a phone, but the chart is beginning to display a left shoulder, head, and right shoulder, all forming near a significant resistance area.

Another key level we're watching is the 20-day moving average. Historically, this moving average has been a useful indicator on the continuation chart.

Right now, that support sits around 360–361. If the market falls below that area and closes under 360, it could signal a much larger move lower.

I know the fundamentals still point to tight cattle supplies, and yes, there aren't many cattle available. But I'm talking specifically about the feeder cattle futures board, which continues to trade at discounts.

If we get a close below 360, it could confirm what we've been viewing as:

• Wave 1 down
• Wave 2 recovery
• A new leg lower beginning

That scenario doesn't make much sense from today's fundamentals unless something changes—whether that's increased imports, weaker consumer demand after the Fourth of July, or another unexpected "black swan" event.

Follow along if you want straightforward market analysis.

And remember—don't shoot the messenger. Right now, the charts suggest cattle could be headed for trouble.

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