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Is It Time to be Bullish on Cattle?, (part II)

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June 16, 2010 – Comments (7) | RELATED TICKERS: COW

In my last post: Is It Time to be Bullish on Cattle?, I said this:

binve says "Moo" [translation: If it makes a higher low at support ~64-65, then there is an inverted H&S setup that targets ~80, which is also the 38% retrace from the top]..... cows have a very concise language, leaves more time for grazing.

Here was the chart from the last post



ENLARGE

The last week has been showing a bottom being put into place where I was anticipating. Here is what the chart looks like today:



ENLARGE

The ETN COW is showing a similar pattern. It somewhat tracks this underlying index (i.e. it is supposed to but doesn't do a very good job all the time).

So, is it now time to be bullish on cattle? binve says "Mrraaa Mrrooooo mo moo Moooo" [translation: yes]

Disclosure: I am long COW

7 Comments – Post Your Own

#1) On June 16, 2010 at 2:50 PM, Momentum21 (96.03) wrote:

Thanks binve...I love your long ideas...keep them coming...how did you ever decide to chart "COW"? You must really be at a loss for bullish thoughts or maybe this is the beginning...if so great place to start... ; ) 

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#2) On June 16, 2010 at 2:54 PM, binve (< 20) wrote:

Momentum21 ,

Thanks man!

>>how did you ever decide to chart "COW"?

I am a big fan of commodities and definitely Ag commodities. I have invested in RJA, DBA, and SSG in the past, and so I was looking at cattle a few months ago (from the top link) and thought a bottom might be forming there too. 

Thanks!..

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#3) On June 17, 2010 at 2:57 AM, DarthMaul09 (29.66) wrote:

How much of the expected move do believe is related to the cattle industry versus weakening of the US dollar and a rise in commodity prices in general?  In other words do you believe that COW will outperform copper (key base metal) or gold (default world currency)?  And if not then why divest into a potentially weaker performing asset class?

My bias has remained PM, miners and diversified energy.  I have avoided other commodities like sugar due to the wild price swings.

Do you have a real investment in COW or is this more of an academic exercise?  Not criticizing, just curious.

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#4) On June 17, 2010 at 9:16 AM, binve (< 20) wrote:

DarthMaul09,

>>How much of the expected move do believe is related to the cattle industry versus weakening of the US dollar and a rise in commodity prices in general?

The dollar has been rising pretty steadily the last 6 months. This is mostly because the dollar is valued against the Euro (and the Euro is in serious trouble). So we are seeing only a little reaction against the dollar in various assets. I had been discussing this for the last year, that eventually we would see a lot of the traditonal correlations break down when the next phase of the crisis begins to resume

>> In other words do you believe that COW will outperform copper (key base metal) or gold (default world currency)?

Based on the patterns in Copper and Cattle, yes I expect Cattle to outperform Copper. If my count is right for Gold, then Cattle and Gold will be rallying at the same time. Which one outperfoms? I have no idea..

>>And if not then why divest into a potentially weaker performing asset class?

This is a trade. I have different portfolios with different timeframes and different goals. My very long term investment account is heavily weighted in gold and silver. There is no asset class that I expect do do better over the next 5-10 years. That said, in a shorter timeframe (say 6 months to 1 year), other assets may outperfom. I do some intermediate term and swing trading as well. This trade in COW (and yes I have a real life trade) would be an intermediate trade, maybe 3-6 months. If the Cattle index reaches 80 like I think it will, I will revaluate the trade based on the strength of the move.

Based on an *investment* standpoint, here is what I think over the next 5-10 years

Gold --- (most bullish)
Silver
Gold/Silver Miners
Agricultural commodities
Industrial Metals
Oil
Other commodities
Oil Producers
Oil Services --- (less bullish)
---- (neutral) -----
Consumer Staples --- (less bearish)
Select Large Caps
General Large Caps
US Dollar
Short Term US Treasury Debt
Long Term US Treasury Debt
Homebuilders
Commercial Real Estate
Small Caps
Consumer Discretionary
Financials --- (most bearish)

But like I said above, in shorter timeframes, other assets classes can outperform due to oversold condtions..

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#5) On June 17, 2010 at 11:12 AM, 4everlost (29.35) wrote:

Woah there cowboy - I have some strange thoughts when I think about being a bull on COW... don't tell the children.

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#6) On June 17, 2010 at 11:39 AM, binve (< 20) wrote:

4everlost ,

LOL!!!..

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#7) On February 26, 2011 at 5:41 PM, julia552 (< 20) wrote:

Oil prices are expected to rise, beef is a direct product of fuel through fertilized grain, trucking, production etc. And, as oil prices rise, people will have less money to spend on meat-- they'll move to cheaper meats or beans. 

 Together,  these things as put downward pressure on cattle prices across the line-- feed and trucking are more expensive for the producer, so they decrease buying at auction, esp. when consumers stop shopping for it in the grocery store cause their broke. How do you reckon this?  

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