by Jim Wyckoff, Senior Analyst TraderPlanet.com

DECEMBER LIVE CATTLE

December live cattle closed up $0.65 at $103.90 yesterday. Prices gapped higher on the daily bar chart and closed near mid-range yesterday on short covering, bullish “outside markets–soaring crude oil pricesand a plunging U.S. dollar–and a friendly USDA cattle of feed report issued Friday afternoon. However, prices are still in an 11-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to push and close prices above solid technical resistance at last week’s high of $105.40. The next downside technical objective for the bears is pushing and closing prices below solid technical support at last week’s low of $101.05. First resistance is seen at yesterday’s high of $104.35 and then at $104.80. First support is seen at yesterday’s low of $103.60 and then at $103.30, the bottom of yesterday’s downside price gap on the daily chart.

Wyckoff’s Market Rating: 3.0.

NOVEMBER FEEDER CATTLE

November feeder cattle closed up $1.17 at $106.47 yesterday. Prices closed nearer the session high yesterday on short covering in a bear market. Bullish “outside markets”– soaring crude oil prices and a plunging U.S. dollar–did support this market yesterday. However, bears still have the near-term technical advantage. Prices are still in a steep six-week-old downtrend on the daily bar chart. The next upside price objective for the feeder bulls is to push and close prices above solid technical resistance at $108.60. The next downside price objective for the bears is to produce a close below solid technical support at last week’s contract low of $102.87. First resistance is seen at yesterday’s high of $107.00 and then at $107.50. First support is seen at $106.00 and then at yesterday’s low of $105.65.

Wyckoff’s Market Rating: 2.5

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Source: VantagePoint Intermarket Analysis Software


DECEMBER LEAN HOGS

December lean hogs closed up $1.30 at $67.35 yesterday. Prices closed nearer the session high yesterday on short covering in a bear market. Bullish “outside markets”–soaring crude oil prices and a plunging U.S. dollar–did support this market yesterday. Bears still have the technical advantage. Prices are still in a steep six-week-old downtrend on the daily bar chart. The next upside price objective for the bulls is to push prices above solid chart resistance at $69.00. The next downside price objective for the bears is pushing prices and closing below solid technical support at $65.00. First resistance is seen at yesterday’s high of $67.70 and then at $68.00. First support is seen at $67.00 and then at yesterday’s low of $66.65.

Wyckoff’s Market Rating: 2.5


FEBRUARY PORK BELLIES

February pork bellies closed up $2.82 at $93.72 yesterday. Prices gapped higher on the daily bar chart and closed near the session high and hit a fresh three-week high yesterday. The next upside price objective for the bulls is closing prices above solid technical resistance at $96.00. The next downside price objective for the bears is pushing and closing prices below solid technical support at $90.00. First resistance is seen at $94.00 and then at $95.00. First support is seen at yesterday’s low of $92.70 and then at $91.80.

Wyckoff’s Market Rating: 5.0

GENERAL COMMENT

The U.S. government’s bailout package for the U.S. financial sector yesterday sent inflationary jitters throughout the investmentlandscape. This is mainly due to the big and toxicdebt load the U.S. government is taking on, including the fact the government is now printing money to finance that toxic debt and keep financial markets afloat. There are two economic theories being bandied about in the aftermath of the biggest financialdebacle since the Great Depression: one is an inflationary environment and the other is a deflationary environment. yesterday, the inflationary theory was very prevalent, as commodity markets rallied strongly, led by record one-day price gains in crude oil, soaring gold and a sharply weaker U.S. dollar. Today, the rest of this week or the coming months may be a completely different story.

With the Dow being down more than 350 points yesterday, I still think consumers are very spooked and are going to re-trench in the coming weeks and months, which does suggest deflationary pressures. I am still in the camp that believes deflationary pressures will take hold of the U.S and world economies in the coming days, weeks or few months. One or two days’ market action has not changed my notions on that matter, especially given the volatility we’ve seen in many markets recently.