We were stopped out of the cattle short today.  When we have a swing or exhaustion candle we will try again.

​I did not give you a day to think about the Live Cattle trade I suggested.  The research I follow gives indicates this move usually occurs later in the month, but I think it has started a bit earlier.  I think that cattle have topped for now. 

The risk here should be easy to manage.  Go short one February Live Cattle contract at $128.50.  Place a stop GTC at $130.8 which is just above the swing high.  Your risk will be .2.4 x 400 = $920.  The target is the  38.2% retracement at $122.5.  This would give a $2,400 profit on the trade.....a 2.5 to 1 return to risk ratio.

Research shows that selling Live Cattle between November 27 and December 8 has averaged a $1034 profit 15 of the last 15 years.  Looking at the seasonal chart from Sentiment Trader from November 27 (day 331) until December 8 (day 342) shows a dramatic drop in that time frame.

​The optimism index for cattle are nearing excessively optimistic levels.  This is what you want to see when contemplating a short futures position......a market which is running out of buyers.

​The weekly stochastics and RSI oscillators are at extreme overbought levels.  I expect they will turn lower soon.

The contract size of one Live Cattle futures contract is 40,000 lbs.  This will be a short term position, probably lasting a month.  It would only take just over a $2.60 drop to reach the $1034 average trade profit over the past 15 years.  I am looking for some modest exhaustion in trade.

​I am not yet ready to pull the trigger yet but could any day.  I am awaiting a swing high or an exhaustion candle.  If this is the kind of trade which might interest you, I would recommend getting ready now.  The margin for one contract is $1,500.

We are couple weeks into the first speculative trade which was to buy July Lean Hogs @ $80.50 back on October 15.  .  Since then, prices have now moved to 82.85 near the first target I had set.  The guaranteed money here is pretty good if you decide to exit the trade.  If you sold here, you would make 2.35 X 400 = $940 per contract.  

If you decide to continue holding this position, I suggest increasing your stop to $81 to at least guarantee a $200 gain to preserve capital.