wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(October 23, 1997) HOGS: SHORT TERM–Expectations of higher cash prices brought on a round of short-covering, with a firmer than expected tone to the market encouraging the buyers. Runs are lighter than anticipated. Attitudes that the market is oversold also encouraged buying. Much of the selling has been based on ideas that there are increased supplies ahead of us. However, this is a futures market. We may have priced in any increase in hog numbers.
RESISTANCE–Resistance basis Dec. lies near 6100, 6200, 6272, 6300, 6400.
SUPPORT–Basis Dec. lies near 6000, 5960, 5890, 5850.
RECOMMENDATION–Aggressive traders could consider buying Dec. hogs near current levels or on dips into the low 6000's with stops under 5960 or of 50 points, and/or sell a rally to 6160 or so with the same stops. Stay nimble, as this market has not held gains well. Conversely, we've seen quite a bit of selling in this market, so short-covering may be more of a feature on rallies. Don't be afraid to bargain if initiating short positions. If the funds decide to blow out of positions, the upside could be a bit higher than expected. Option traders could consider buying Dec. calls at current levels for an eventual rally to the 6300-6500 area.
M. Steven Morgan
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