Like I suggested last week would happen, the gap that was left late last summer has been filled. Gaps often mark turning points, but as you can see in the chart below, price has blown on through the gap following two up limit days. Looking ahead, there are two targets I can see. The first target is at $151 from last August's high which looks likely to be hit. The second target is much more pie in the sky from a gap which was left over a year ago at $161. These are actionable places where it makes sense to consider protecting your futures price.
The CCI is not the best gauge to follow with cattle, but if price reaches $151 its likely to trigger a sell signal on the CCI. The other metric to consider is sentiment. Sentiment Trader pegs trader optix at 75 which is the highest level since November of 2014.
The bottom line is that this rally is getting long in the tooth and will need to either trend sideways or lower for a while to burn off excessively bullish sentiment to get more buyers interested in entering the market. If we are at an intermediate cycle top, this means we will likely have lower prices for the next 2 months. This would be long enough for prices to come back to the 200 day moving average before its next advance.
Again, you can protect these price levels using LRP insurance, or buying puts or bear put spreads which are not marginal.
I was looking at the Feeder Cattle contract for a friend today. Cattle has enjoyed a tremendous rally this year. Today, prices began entering a gap that was left last summer. I would expect this gap to fill but those are often turning points. If you have some feeders you would like to get priced, now would be a good time to look at a put option, a bear put spread, or an LRP insurance policy.