The cycle of accumulation and distribution defines cause (building) within a mark up phase for live cattle.
Cattle has been building cause since December 2014. Beef producers have been watching a market in steady decline for months. Activity in feedlot areas likely will be limited to distribution of new show lists. Slow accumulation and growing fear has smart money watching for signs of weakness (SOW) during what's normally seasonal strength.
Trend
Negative trend oscillators define an down impulse (decline) from 151.45 to 140.16 since the first week of May (chart 1). The bears control the trend until reversed by a bullish crossover.
A weekly close below 139.55 breaks the ice of cause and transitions the trend to mark down. A close above 170.83 restores mark up.
Leverage
The flow of leverage defines a bear phase since August 2014 (chart 2). A DI2 close above the March 2015 high confirms continuation . A DI2 close below its September 2013 high reverses the phase to bull.
A diffusion index (DI) of 31% defines moderate accumulation. A capitulation index (CAP) of 54%, a message of growing fear, defines a more bullish message (chart 2A). These trends, the flow of leverage and sentiment from accumulation to distribution and fear to complacency, tightens risk management for bears as concentration grows.
Positive leverage oscillators define an up impulse that supports the bear phase and trend (chart 3).
Time/Cycle
The 5-year seasonal cycle defines strength until the fourth week of October (chart 4). The bears will be watching for signs of weakness (SOW) into the fall transition.