wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(December 11, 1997) HOGS: SHORT TERM–Ideas of an improved cash pork product market sent the hogs higher. There is also talk of another outbreak of hoof and mouth disease in Taiwan. Traders are beginning to look for a seasonal rally and for cash to bottom. Funds are very short, and they have the power to send this market back to new lows, so traders should stay alert. Aggressive short-covering could become a factor if the market can take out 6330. A hazard to higher prices is the Asian weakness.
RESISTANCE–Resistance basis February lies near 6140, 6200-6210, 6290-6300, 6330, 6380, 6440-6460, 6510.
SUPPORT–Basis February lies near 6050-6070, 6000-5980.
RECOMMENDATION–Option traders could consider buying February 6200, 6300 or 6400 calls near current levels for an eventual rally to the 6400-6500 area. Aggressive traders should buy 30-50 point dips from current levels with 100-point stops. Look for a move to 6400-6500, although a move to the 6700's can't be counted out. Selling may emerge in the mid-upper 6100's, and if very aggressive, look to sell in that area with 100-point stops. In any event, watch for a failure in that area. Seasonals suggest a low in this time frame.
M. Steven Morgan
Hogs
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Cattle
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