wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(October 23, 1997) HOGS: The pork complex spent the past week fixed in a mostly sideways, but volatile trade as the market found early pressure from the weak cash and product markets. Pressure faded by mid-week due to a light hog run and signs that this condition might exist through the next few weeks. Cash hog tops ended about steady with last week as trade took place between $46.00 to $48.00. The product sector also showed signs of life as some cuts started to gain ground, which also sparked a minor rally in the dressed pork cut-outs. Overall, market internals are turning a bit positive, and when one considers that the futures are now well below the CME cash index, it would appear a rally may be in order. The hog run this week has not been very uniform and there is even some indication that runs will be light near term. If this does become a trend, it might set up a very powerful recovery after terrible action recently. Technically, December lean hogs are in downtrend; the would turn back up on a close above $64.52.
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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