Live Cattle futures have been on a steady move higher since price bottomed in early April. Like price, sentiment moved higher during that move – bottoming at 8% Bulls on 04/03 and peaking at 93% Bulls on both 08/11 and 08/12. Even though price continued to move higher through 08/14, sentiment dropped to 85% Bulls – that type of divergence always catches our attention. In this case, we think this setup gives us a nice short opportunity.

Here are the filters we used to develop our trade plan:

  • DSI: Close between 80-90% Bulls
  • Five-Day Price Change: Gain between 2.3-4.3%
  • Two-Day Sentiment Change: Loss between 6-10% Bulls

Since 2006, this setup has happened only five other times: 04/04/11, 01/17/14, 06/27/14, 11/18/14, and 03/17/16.

Live Cattle Futures

Trade Setup

Looking those past examples, we came up with the following trade plan:

  1. Sell $LE_F on the next close below 109.800
  2. After we enter the short position, place the following two orders:
    • GTC Buy Stop at 110.850
    • GTC Buy Limit 10 points below the entry price

If we used the same methodology to trade the previous setups, we would have entered four trades with a 75% Win Rate and average return of $2.8K per trade (average loss -$1K and average win of +$4K).

LE 2020 08 16


Looking to be more active by entering specific trades? We provide complete transparency to all our systematic model trades. You’ll receive daily alerts with entry and exit points while handling your own money like a pro. No more guess work. Check out our Services page or sign up below.

Trading Plans & Setups

By signing up you agree to our Terms of Service.
btn subscribeCC LG