Hogs at stronger fighting weight

Those looking for a diversion from USFI or equities or ISM might consider...take a look at my blog on lean hogs.

We were caught by the price action in late March that led to some profitable exercise.


Lean Hogs Now at Stronger Fighting Weight

June 2014 Lean Hogs traded to a low of 112.50 on the pit-open of trade today. That is the lowest the contract traded since March 4 when the parabolic advance began to accelerate. Using January 14, as the lift-off date of the extraordinary advance credited to a herd-culling infant disease, June Lean Hogs have now retraced just over 61.8% (Fibonacci) of the move from Jan 14 low of 100.175 to the high of 133.425 on March 18.  
On March 20, the second session following the contract high, I pointed out a bearish reversal that was to be confirmed by price action that day (‘Lean Hogs to Get Trimmed’).

The contract was trading at 130.80 when I offered the bearish Harami reversal diagnosis. The contract came immediately lower to 123.00 over the next 4 sessions before a sharp recovery to a failed attempt at new highs.  It has generally moved lower since.

I expect the contract to trade side-way or recover somewhat into the remaining sessions before June 13 last trading day. There have been 7 new session lows without a three session pause, so June Lean hogs are mildly oversold. Otherwise, there are not dramatic reversal patterns evident.  Today may form a small bullish hammer.    

A seller of 1 contract LHM4 (CME:HEM14) at the March 20 at 130.80 could pocket $702 buying back the short here at 113.25.   
About the Author

Martin McGuire, managing director at TJM Institutional Services

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