wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(November 26, 1997) HOGS: The pork complex was weak during the past few trading sessions as the lower trade eliminated a possible upside breakout of a nice bottoming formation. The market was pressured by both a weak cash hog market and a sagging product sector. The cash market ended the week with hog tops quoted at $43.00 to $46.00, which was $2.00 to $3.00 lower from a week ago. The product sector was also weakened by a heavy hog run as end users headed to the sidelines expecting lower price after seeing the heavy runs develop. Overall, market internals have turned back into a mixed-to-weak state, although the cash market has maintained to hold a serious support level that it has now tested three times around the $43.00 level. If the area gives way it could have negative ramifications, but it seems when the market nears this level hog supplies ease, as was the case during the past week. Look for prices to firm if the hog run is not large to start next week, and if the producers oversold supply ahead of the holiday last week, price could be right back where they broke from in a hurry. Technically, December lean hogs are in a downtrend; the trend would turn back up on a close above $64.15.
FUTURES STRATEGY–Long LHZ at $61.77. Maintain a protective sell stop close only at $60.00.
OPTIONS STRATEGY–Short LHZ $60.00 puts at $.90. Maintain a protective buy stop at $2.15.
Tony Montini
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