Monday, June 2, 2014

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 4th when the parabolic advance began to accelerate.  Using January 14th 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 20th, 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 at the March 20th at 130.80 could pocket $702 buying back the short here at 113.25.   

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