wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 6, 1997) HOGS: SHORT TERM–December hogs sold off due to carryover selling in the bellies. The “Goldman roll” began this week, which is the rolling of fund positions from one month to another, in this case from December to February, with February being the recipient of buying and December of selling. Seasonals support higher prices.
RESISTANCE–Resistance basis December lies near 6272, 6300, 6345, 6400, 6500.
SUPPORT–Basis December lies near 6200, 6160, 6100, 6000, 5960, 5890, 5850.
RECOMMENDATION–It may be that the rolling of positions from December to February is giving traders a solid buying opportunity in the December hogs. Aggressive traders could consider buying December hogs near 6200 or lower with stops under 6150, 6090 or of 50-100 points. Look for a test of the 6500 level, but be alert for selling as 6400 is approached. We've seen quite a bit of selling in this market, so short-covering may be more of a feature on rallies. If the funds decide to blow out of positions, the upside could be a bit higher than expected. Option traders could consider buying December or February calls on dips from current levels for an eventual rally to the 6400-6500 area. February and December hog charts seem to be improving.
M. Steven Morgan
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