Shootin' the Bull about updating the wave count on feeders

“Shootin’ The Bull”

by Christopher B Swift

​12/29/2025

Live Cattle:

The wave count on the fats differs slightly than the feeders.  For the moment, I'm going to stick with the feeders, as they have the greatest propensity to reflect a right or wrong wave count in a narrower price range.  No doubt this will be subject to my interpretation, but all waves fit into the rules so far.  So, here goes for the wave count of the May feeder cattle contract.  The top, as we know it, was made on 10/16, both bar and close only chart.  From there is where I started my wave count down and still consider the downside portion to be correct.  That being, a 5 wave move lower, creating what is believed the wave A.  The wave B is believed "irregular" because the B wave price exceeded the low of the A wave.  In a normal wave count, the entire formation of the B wave should have unfolded above the A wave low, but it didn't and that is where it gets a little complicated and very subject to interpretation.  With the B wave believed completed at the closing low of 11/24 and actual low of 11/25, it led me to anticipate a C wave rally.  Because I am using the close only, I'll use the 11/24 low close to start with.  The C wave took off like a scalded dog and made 5 countable waves on the daily close only chart.  This had me believing the C wave was complete and to begin marketing's at the elevated price levels. For nearly two weeks, traders jostled prices around that eventually formed a 3 wave, sideways pattern.  This is now believed a correction of the initial 5 wave move up. Another new closing high was made on 12/22 that brought into question, "where can I fit more waves?"  On 12/24, a low close made for another wave to consider into the mix.  With today's higher close, the pattern is believed to have unfolded into a 5 wave pattern for which the 1st wave was the extended wave and shows a definitive 5 wave move.  As about the only rule to not break at this time would be that the wave 3 can never be the shortest wave, it won't take much price fluctuation to be definitive.  So, when you view the chart below, note the previous 5 wave sequence is now labeled the wave 1, the 3 wave sideways move the wave 2, the rally to the $336.57 close on 12/22 the wave 3, the 12/24 close wave 4 and today's new high close the wave 5 of wave C.  So far, the wave 3, from close to close measures $5.77.  Hence, in order to remain valid, the 5th wave should not close higher than $340.97 May. A close over $340.97, or under $335.25 will set the tone for the next most probable move. If higher, I'll make the adjustments as they form.  If lower, I would anticipate a major C wave decline that may or may not be like the wave A.  I would anticipate that if a C wave lower does materialize, it may do so in a trend, similar to declining on a slope of hope.  

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The extent of the wave 1 of C is believed two fold. One, the price decline produced a positive basis spread that was inordinately favorable towards cattle feeders and two, the covering of short positions on such an abrupt and large sell off left few sellers at lower prices.  The wave 2 of C was prolonged because everyone had to take a breath.  Wave 3 of C is believed those that bought the stagnation of wave 2 and the wave 5 of C today, produced by very thin trading in the cash markets, and not providing a very good read on what the majority may due next week.  

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I continue to believe that with negative starting margins, and them having only grown worse since the lows made in November, cattlemen will continue to be aggressive in attempting to garner more market share, but potentially, the consumer may not be as willing to participate in the higher prices as they were in 2025.  I rely heavily on the continual division of consumers into the two tier economy with knowledge that there are a whole lot more consumers on the lower end than higher end.  This suggests that were something to curtail the spending of those on the upper tier, and cattlemen already having placed cattle into exceptionally wide negative margins, losses have the potential to be staggering.  

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As prices are expected to return to some form of normal, that would suggest smaller price ranges and potentially a contracting price range, producers reliant upon an ever higher price may be very disappointed with a high price for cattle, but not high enough to return input costs. Cattle prices may remain high in 2026 in comparison to all years but 2025, but if not higher than in 2025, most likely will not be able to show a profit until the spreads between starting feeder and finished fat narrow significantly.  

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Other than this, if the consumer continues to spend at elevated levels, grocers and restaurants reflect an increase in willingness to pay or consume more, the Mexican border remains closed, expansion takes place, and imports of beef from South America aren't too burdensome, cattlemen may well push cattle prices to new all time historical highs.  

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Feeder Cattle:

​Below the May chart, there is an excerpt from the book "The Major Works of R.N. Elliott."  Note that it states that irregular corrections in bear trends are seen, but very rarely.  So, that makes this analysis that much more important.  As few believe the price can go down, based upon supplies, if I am right, you may have well potentially positioned yourself to remain in business.  If I am wrong, and the pattern evolves otherwise, then I'll make whatever adjustments need to be at that time.  A great deal of price discovery, volatility, and shifts in fundamental production schemes have been seen this year.  This makes me question if two years in a row can produce outstanding price advances, as well as, continue into a 6 year bull market. Because this pattern is rare, the recognition of is believed even more significant if interpretation is correct. In that picture, upon completion of the wave C, a new 5 wave move lower would be anticipated.    

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​Corn:

​All were lower.  Beans are believed resuming their down trend.  I anticipate beans to trade lower and corn to revisit the bottom end of its trading range.  ​

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Energy:​

​Energy was higher after last Friday's sell off.  Russia and Ukraine continue to be a thorn in the side of energy prices.  Retail pump prices are showing the declines we've seen recently.  Were a peace deal to be reached, I would anticipate energy prices to fall sharply.  ​

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Bonds:

​Bonds were firm, but not by much. Bonds are stagnating in this area and may continue to do so with the yield curve desired yet to be met. ​

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​​​​​​ “This is intended to be or is in the nature of a solicitation.”  Futures trading is not for everyone. The risk of loss in trading futures can be substantial; therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not indicative of future results, and there is no assurance that your trading experience will be similar to the past performance.