wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, chicago, Illinois
(November 6, 1997) HOGS: The pork complex spent the past week fixed in a mostly sideways, but volatile trade as the market found pressure form the weak product markets, but underlying support stemmed from a steady to firm cash market. The market seemed real confused at the end of the week due to lighter-than-expected hog runs, which put the packers in a defensive state as many declared they would have to cut kills. This tactic has worked for them in the last few weeks, but if the runs do not pick up next week, it could leave them bidding the cash market up to regain lost market share. The cash market ended the week with hog tops quoted at $45.00 to $47.00 which was steady from a week ago. The product sector was not as fortunate, as most sectors were weaker after last week's run-up which signals that foreign interests are not yet ready to purchase big supplies of product. The latter mostly due to financial turbulence in Asia, not to mention, that most expect lower prices. Overall, market internals are mixed, but positive signs still exist, especially if one considers that the futures remain well below the CME Lean Hog Index. Technically, December lean hogs are in a downtrend; that would turn back up on a close above $64.30.
FUTURES STRATEGY–Long LHZ at $61.77. Maintain a protective sell stop close only at $60.00.
OPTION STRATEGY–Short LHZ $60.00 puts at $.90¢. Maintain a protective buy stop at $2.15.
Tony Montini
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