Feeder Cattle/Corn Spread
The blog entered a short position in the August-September feeder/corn (x6) spread at -$6,975 (premium the sum of the six corn contracts) on June 25th. The spread continued to freefall and it posted a new contract low yesterday.
The December and February lows of -$22,625 and -$23,350 were broken last week, sealing the spread’s fate. Now that it has been broken, these prior lows have gone from being a price support level to being a price resistance level.
In the event that the August-September feeder/corn (x6) spread does close back above these old lows, we will have a Wash & Rinse buy signal on our hands. If that happens, it may be time to bag the profits and wait for a new setup. Therefore, we are going to recommend using the Wash & Rinse buy signal as our new liquidation criteria.
On the short position in the August-September feeder/corn (x6) spread, change the exit signal from a close above +$4,300 to a two-day close above -$22,500.