March 6th the August LC declined for 14 days with a 3.3% (-$5.40cwt) retracement to 3/22. Then the market advanced $10.40 or 6.7% over 23 days to $165 ending on 4/13. The next pull back was 3.5% (-$5.75) to 5/5. The big extension higher to $178.10 rallied $18.85 or 11.8% over 31 days. The next retracement was -$10.00 (-5.6%) back to $168.10 on 6/21. That week the cash market was 178, $10 over the futures market. With the strength in the cash market, the bulls took over and rallied to new highs of $181.17 or 7.7% over the last 14 days. If the next pull back matches the largest pullback of 5.6% or -$10.00, that takes it back to the red line of $171.15. If the break is the average of the 3 previous pull backs, that takes the market to the blue line of $173.67.
- Tom Fanning