This is a sample entry from Andrew Pawielski’s email newsletter, Market Dimensions Advisory, published on December 02, 2015.
As mentioned yesterday there are several spreads I am watching to start the month of December. The next spread I like is a longer term play in the feeder cattle market. It is selling the March Feeder and Buying the May Feeder. This is based on the fundamental idea that the meat markets have room to sell off due to the recent high prices we have seen and with a stronger dollar there could be more room to run. In addition there is a seasonal window at the end of December for this to historically sell off. With us coming off a recent sell off in this spread from early November I want to use a technical entry on what could be a fundamental and seasonal move lower. See the historical price averages in the chart below. If I am wrong, I am limiting our risk above recent highs and spread parity.
Below is the trade write up and the charts. This could be a trade we hold for some time, and if we are right, could offer additional areas to add to the trade.
Trade: Sell March16 Feeder Cattle – Buy May16 Feeder Cattle (dt Pro symbol: GF FTS +H6, -K6)
Entry: Sell the spread @ -1.400 or better
Risk: Buy stop @ +0.200 (risking 160 pts or $800 before fees)
Target: no active order but looking to challenge the -5.00 prices or lower
Margin: $1870 per spread
Tick Value: each tick = $5
4 hour Chart
Historical Price Movement
For those who would like to discuss my specific entry of this trade, please reach out to me directly, and we can discuss what entry, stop, number of contracts and target will be best for you based on your risk profile.
If you would like to follow along with more of my trade ideas or know what I am watching in the markets I encourage you to sign up for my free trading advisory, Market Dimensions Advisory, below.
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