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For: Tuesday 06-22-2010

Bearish Engulfing

The cattle market posted a bearish engulfing session. The market rallied into a small gap area left on the charts and reversed. This looks like a much larger bear flag on the charts. We will look to buy put spreads with short calls attached on a larger breakdown.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On an 8820 print versus the August, before Thursday, buy the 86 – 82 put spread and sell the 94 call for a debit of 50 points on a limit. Risk 100 points on the trade initially. (>$400 not including commissions and fees), Look to take profits if the market trades to 8400.