wmeubank@ocp.kcmo.com
COMMODITY INFORMATION SYSTEMS TECHNICAL COMMENTS
A Pullback Is In Order!
HOGS: The first leg (1) of the advance gained 790 points. The Fibonacci objective for the second leg (2) is 77.80 and a high of 77.00 was attained in late April. Although the objective was not quite reached, the advance was close enough to satisfy second leg requirements. The measuring gap objective shown in the previous issue at 76.25 was also completed. With primary objectives reached for the second leg, a pullback appears in order. A typical pullback would be 38 to 62% of the most recent advance. A 38% pullback would be 72.42 and 62% would be 69.60. This area represents the next primary buy zone. Stochastics showed divergence on the latest advance and gave a "double hook" sell signal on the close of 4/25/97. This significant signal in stochastics confirms the possibility of a primary pullback in the near future. Following completion of the next pullback phase, objectives for the third leg will range from 77.50 to 80.32.
Although export demand is expected to reach extremely strong levels in months to come, it is important to remember that domestic consumption accounts for 92% of total usage. The chart illustrates the importance of domestic demand...
Although export demand has expanded sharply in recent years, it remains too small a percentage of the total to be an overall decisive factor in price.
Beef production is forecast to reach near record levels from now through summer. Beef is now favorably priced against pork and consumers have begun to shift buying habits. Favorable beef prices are expected to retard the advance in hog prices through early summer. However, as beef supplies begin to tighten into fall, hog prices should once again return to a bullish mode.
May 3, 1997
Bill Gary
Commodity Information Systems, Inc.
210 Park Avenue, Suite 2970,
Oklahoma City, Oklahoma
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