Lean Hog Futures (CME.LH) opened Friday's session up 'big' (more than one standard deviation stronger than the average), at 77.40¢ after closing Thursday's session at 76.70¢. LH has also gapped open higher on Friday, the third day in a row it has done so, where the open was higher than the previous day's high. During the session, LH crossed above its 20-day high.
Q: How has CME.LH performed in the past, over the next 20 trading days while omitting repeat occurrences within 10 trading days, when it opens up 'big' on a gap up higher pattern and crossing above its 20-day high?
A: According to the 10 previous occurrences of this event, EventEdge indicates that CME.LH has shown a strong bullish edge that peaks eight trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Friday, July 18, 2008) is Wednesday, July 30, 2008.
CME.LH rallies in 90% of the cases (9 of 10) by an average of 5.3% relative to the close on the event date. The average of the 1 decline is -0.4%. The overall return of the 10 cases is 4.8%, which, based on the close of CME.LH on the event date (76.90), provides a target price of 80.591.
The second graph shows, more specifically, just how the front month August contract has performed in the past after the same event. In this case the edge is not as significant.
According to the 13 previous occurrences of this event, EventEdge indicates that August hogs have shown a weak bullish edge that peaks 20 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Tuesday, July 17, 2007) is Tuesday, August 14, 2007.
LHQ rallies in 77% of the cases (10 of 13) by an average of 7.9% relative to the close on the event date. The average of the three declines is 3.9%. The overall return of the 13 cases is 5.2%, which, based on the close of LHQ on the event date (74.03¢), provides a target price of 77.87¢.
For more Market History analysis go to www.markethistory.com
Ronish Patel is an analyst with MarketHistory.com.
