The information and opinions expressed below are based on my analysis of price behavior and chart activity

7/31/2025

September Feeder Cattle

New contract highs and a large bearish reversal in Feeders seem to signal a short-term top

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September Feeder Cattle (Daily) 

Today, September Feeder Cattle closed at 331.550, down 8.200 on the day.  To my eye, that seems like a market that has put in a top, at least in the short-term. After opening the day higher and rallying up to set a new contract high within the first 30 minutes of trade today, Feeders got hit with a large wave of profit taking before settling at new lows for the week.  Today’s trade appears to be a Bearish Engulfment, not just relative to Wednesday’s trade, but relative to the whole week. That means that nearly everyone that has been a buyer this week is likely losing money.  That could spur some additional margin selling tomorrow.

The fundamentals have not changed, to my knowledge. The 3 USDA reports from last Friday (Cattle on Feed, July Inventory and Cold Storage) all reflect tightening supplies as the cattle herd is showing little sign of expanding.  Supply/Demand, in my opinion, is still very bullish and I would still expect higher prices and new contract highs down the road.

But today’s trade did do some damage to the technical side of the market, and for that reason, I’ve turned into a short-term bear.  I would think that some of the selling pressure came in the form of profit taking today, as it is the last day of the month.  Feeders have made huge gains this month, even with todays sell off, the September contract still finished up 20.925 in July.  That’s 9 straight months of price gains and many people would make the smart choice to take some profit during a huge summer rally.  I also think the mysterious “algos” and “funds” probably added to the bearish momentum today. 

Trade volume today was high, the highest this contract has seen since July 10^th.  That was also a “bearish” day that closed lower that it opened, also with a large trading range, but the futures still managed to close higher that day.  Today, not so much, the bears took control.  Typically, when I see high volume and a strong directional move, up or down, I would expect to see more follow though from the market. 

The 5- and 10-day moving averages (blue/red) are still pointing higher, but are now both above the market at 335.025 and 331.715, respectively.  Those averages may offer resistance now.  The 50-day (green, 312.630) and 100-day averages (grey, 301.450) are well below the market offering a level of support some (roughly) 19.000-20.000 lower.  Looking back at the chart, it seems that the 50-day has been a solid support level all year, while the 100 has never come into play. At this moment, I don’t think it will. Stochastics hooked out of overbought status today and are pointing toward lower prices.  This market has been overbought for most of July, so perhaps a retracement is due. 

I didn’t put the Fibonacci levels on this chart (too cluttered) but the 23% is at 331.375, the 38% is at 325.400 and the 50% level is at 320.575, as calculated from the June 24th low to today’s high. The 325.400 mark coincides, somewhat roughly, with the highs of July 10-18 and the 320.575 corresponds with the lower support levels in that same time frame.  The 62% number at 315.725 will likely match up with the 50-day moving average, if/when it gets there. 

So how can one take advantage of this?  Traders with patience, may do well to wait and be a buyer near the 320.500 or 315.750 levels.  For those that don’t have patience like that…Aggressive and well margined traders may do well to consider establishing short positions, with potential profit targets at those levels.  Perhaps selling at or near the 10-day average, 331.70, would be a reasonable choice.  As far as a protective stop goes, I’d leave that up to you as you know your risk tolerance much better that I do.   Volatility has been high, with the market having larger price swings intraday, so a Buy Stop order in the futures may end up frustrating you.   August Call options are the least expensive, with just 28 days to expiration, and would offer a good way to protect a short futures position.  Take care to mind the Delta (rate of change) on the options you choose, as 1 call will NOT match the price move of 1 futures contract.  For traders that are less aggressive, consider a Put in September options.  Today the 325 Put closed at 5.200, or $2,600, before commissions/fees.  Look to take profit at 2x what you paid for the option.

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Every morning, at about 8 AM CST, I post a short video highlighting where I see opportunities in the futures markets.  You can view my most recent video here   

 September Feeder Cattle (Weekly)

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Every morning, at about 8 AM CST, I post a short video highlighting where I see opportunities in the futures markets.  You can view my most recent video here   

Jefferson Fosse  Walsh Trading

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